$LUCY $LUSD Ethereum Launch Planning

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Link to $LUCY Launch Proposal to DAO on PowerPool GDrive

Introduction to PowerVaults

PowerVaults are PowerPool’s next-generation, highly-automated, smart-optimisation vaults that use the PowerAgent v2 (& beyond) autonomous automation network.

$LUCY: ‘Defensive’ stablecoin multi-source yield (including liquidations)

$LUCY is a new stablecoin-based multi-source yield optimisation PowerVault that automatically harvests yield from multiple sources on the Liquity over-collaterised ETH $LUSD stablecoin, including ‘defensive’ collateral liquidation premia, more frequent in ‘down’ markets when ETH prices can fall quickly. The $LUCY PowerVault fully utilises the Balancer v2 custom pool architecture, Aave lending pools, Liquity internal yield options and liquidation services from B.Protocol, all under the control of the new Power Agent v2 decentralised automation network. Liquidations yield rises when ETH prices fall, usually in down markets, meaning that $LUCY yields can rise in down markets.

Based on PowerPool Labs simulations and backtesting of the StableSwap model with an arbitrage agent modeled on on-chain data, $LUCY can offer ~15% yield without additional rewards, i.e. this yield is generated without “token printing”-style liquidity incentives. Additionally, the yield doesn’t require the liquidity provider to hold/lock other assets (besides $LUSD) in advance to generate the yield. In summary, $LUCY is canonical structured DeFi, providing ‘defensive, multi-source yield on ETH-based over collateralised stablecoin like $LUSD.

We plan to launch $LUCY ($LUSD+a-bb-USD Balancer v2 pool) as soon as possible with a collaborative multi-protocol approach to awareness and marketing. $LUCY in launch form is a Balancer Boosted pool built on top of bb-a-USD and involving LUSD. It's a stablecoin pool that pairs $LUSD with a three-pool of USDC/DAI/USDT, similar to the LUSD-3CRV pool on Curve. The main difference is that the stablecoins in the pool also harness additional yield sources leading to enhanced native yields for liquidity providers.

In detail, the $LUCY Balancer pool consists of the following assets:

  1. bb-a-USD described above (USDC/DAI/USDT + wrapped aVersions) [3x linear pools]
  2. LUSD + a wrapped LUSD staked in Liquity Stability Pool [linear pool]

Thus $LUCY is a 4 stablecoin pool — for each stablecoin, it involves the raw versions to facilitate swaps, as well as a wrapped yield-bearing variants to optimize LP’s returns. Thus, the LPs will be earning from 3 sources of income:

  1. The trading fees: every time a swap is routed through the pool, a commission is collected.

  2. Native stablecoin yield: each stablecoin in the pool is harnessing a yield source, be it Aave for USDT/USDC/DAI, or the Stablility Pool for LUSD.

  3. (Not directly at launch, but can be obtained after through governance) BAL rewards: once a BAL gauge is obtained (through governance), BAL rewards will be allocated LPs.

    Yield Sources.png

LUCY is a novel, advanced and unprecedented type of pool. To function properly, it requires automation in the background — as smart contracts cannot be triggered themselves. This is where PowerAgent automation network comes into play: it’s the generalized, autonomous, decentralized automation network handling recurring operations required by $LUCY, such as calling the harvest or compounding the gains.

About $LUSD from Liquity

Liquity is an interest-free borrowing protocol that allows minting the $LUSD stablecoin using ETH as collateral. Unlike Maker DAO collateral liquidations, Liquity debt is repaid via a specialised Liquity $LUSD Stability Pool rather than by “permissionless” liquidators. The proceeds from periodic ETH collateral liquidations (liquidation premia) are distributed among Stability Pool $LUSD stakers.