This proposal seeks to onboard agEUR as a collateral asset on Silo on Ethereum.
Project - https://www.angle.money/
Documentation Portal - Angle Documentation Portal - Angle Docs
Github - Angle · GitHub
Discord - Angle Protocol
Twitter - https://twitter.com/AngleProtocol
Angle Analytics - Angle Analytics
agEUR Dune Dashboard - agEUR volume and transactions
Initially launched on mainnet in November 2021, Angle is a decentralized and over-collateralized stablecoin protocol.
The protocol has launched agEUR, a Euro stablecoin, which has become the biggest decentralized Euro stablecoin. The TVL in the Angle Protocol is $52m with 37m agEUR in circulation.
agEUR is also the most traded Euro stablecoin on-chain and the most integrated across the Defi ecosystem.
There are different mechanisms (also called modules) by which agEUR can be issued all having in common that agEUR must be released on the market in an over-collateralized way.
In the Core module of the protocol, agEUR can be minted from USDC, DAI and FRAX at oracle value. The protocol insures itself against the $/€ change risk by issuing perpetual futures and by relying on the deposits of another type of agent (Standards Liquidity Providers) incentivized by the strategies built by the protocol and by transaction fees. agEUR issued from this represents the biggest share of the agEUR in circulation, and they are currently over-collateralized at 200%.
The protocol also has a borrowing module where agEUR can be borrowed against different assets depending on the chain (ETH, wBTC, wstETH, LUSD, MAI) similar to Dai from Maker DAO.
The protocol is also engaged in algorithmic market operations (also called direct deposit modules). It has for instance minted agEUR natively on Aave and on Euler. In these cases, agEUR enter in circulation when they are borrowed in an over-collateralized way on the corresponding protocol. The protocol also mints agEUR on the agEUR-EUROC Curve pool when this pool has more EUROC than agEUR (like what FRAX is doing).
agEUR is an ERC20 token backed by reserves composed of USDC, DAI, FRAX, WETH, and WBTC on Arbitrum.
With the addition of agEUR as collateral on Silo, we want to (1) service funds, DAO, and individuals users looking to provide utility for their agEUR, (2) attract agEUR holders and all Euro seekers to Silo where they can borrow the two of the most sought out assets in Defi i.e. a USD-pegged stablecoin (XAI) and ETH.
This will also benefit both the Angle and Silo by allowing users to short USD and ETH. This is an interesting and unoffered use case for a Euro stablecoin by another platform.
Silo would be the first money market platform to support agEUR as collateral on Ethereum. The agEUR token is the Euro stablecoin with the most volume and this volume has increased steadily since its launch. Silo would be benefiting from this increasing demand and onboard the cohort of users coming with it.
Overall, this use case will create the opportunity to continue growing user activity and diversity on Silo.
Bad Debt Risk
The main risk is accumulating bad debt on agEUR positions if loans cannot be liquidated. This risk is mitigated as agEUR’ has deep liquidity on Ethereum and low slippage (for instance, there is currently only a 0.33% price impact for an agEUR→ETH swap on 1Inch). This will ensure on-time and smooth liquidation, it being specified that Silo will be able to monitor agEUR’s price through a TWAP oracle (similar to what is already done by Euler with agEUR).
Smart Contract Risk
The token is a standard ERC20. To date, there have been no hacks or vulnerabilities on the project. Contracts are audited and the protocol is overcollateralized with a backstop of ~$7M to date i.e. if all collateral is redeemed, and all agEUR in circulation is exchanged to get back such collateral, the protocol will still have $7M in reserve.
agEUR kept a strong peg since its launch in November 2021. The protocol’s mechanism resisted the market turmoil after the UST depeg, and it even helped agEUR maintain the peg of other centralized Euro stablecoins like EURs through our common Curve pools.
Considering that the reserves of agEUR are composed of USDC, DAI, FRAX, WETH, WBTC and LUSD, a systemic risk affecting these assets all at once, in particular USDC which composes the majority of the protocol reserves, would put the protocol at risk.