Evmos: Community to Sponsor Development of LSDFI on EVMOS

Author: Sebastian Aaron Telegram

Summary

We request 1,056,000 EVMOS (≈$75000 @ $0.071 per EVMOS) from the community pool to replicate and adapt Lybra Finance - an Ethereum LSDFI protocol currently holding the top 1 TVL (over $320 million USD TVL, which is greater than the combined TVL of crvUSD, Pendle, Raft, and Gravita) on the Ethereum network - onto Evmos to provide liquidity for staked assets and generate stablecoin yields.

The project will be called Gliese - named after a planet classified as a super Earth.

We will need to write 2 core smart contract ourselves due to those part of Lybra's smart contract is under BUSL-1.1 to avoid breaching the law.

The prototype website has been released.

Commonwealth

Discussions for this proposal can be found in the Commonwealth.

How Gliese Will Benefit the EVMOS Ecosystem

The current market capitalization of EVMOS is $45 million.

Due to high inflation, 42.2% of EVMOS holders tend to stake their EVMOS and enjoy the high APR, excluding the community pool, treasury, and team. This leaves 10% of the EVMOS supply, which is approximately $4.8 million worth, in the free market.

Among the $4.8 million worth of EVMOS, there are only $450K EVMOS added to Tashi, $80K in WEVMOS, and $208K in STEVMOS in the Forge liquidity pool. If we do the math, $4 million worth of EVMOS are currently idle or with an unknown usage.

This leaves Forge and Tashi - Two of EVMOS's DeFi protocols - struggling to attract TVL and thus heavily relying on incentives from the community pool, which is not ideal long-term.

We need to find a way to activate these idle assets. Even if we can activate 20-30% of them as TVL, it would greatly benefit EVMOS.

A DeFi protocol utilizing liquid staked assets is a potential solution.
Let's examine what staked assets are doing now on the EVMOS network.

There are $1.8 miliion worth of stEVMOS minted on stride to date.

Only ~$209000 stEVMOS have been added to forge liquidity pool.

This leaves approx $1.6 million worth of stEVMOS as idle assets on the network.

When Evmos add LSM module introduced by cosmos, users will be able to convert staked evmos to liquid staked evmos (stevmos) without unbounding, this could unlock significant liquidity to the evmos ecosystem and most of them might be still an idle assets.

Introducing Gliese into EVMOS could drastically inject these idle assets into the network and attract more holders to provide liquidity, trade, and use lending & borrowing protocols.

Here is how Gliese could spur upward growth for the EVMOS ecosystem:

Users stake EVMOS into stEVMOS on Stride or swap for stEVMOS on Forge.
Then deposit stEVMOS into Gliese to mint gUSD - an over-collateralized stablecoin secured by a ~ 200% collateral ratio of stEVMOS
Minted gUSD can be paired with USDC or USDT as liquidity on Forge, earning yield on fees and incentives.
Minted gUSD can be lent and borrowed on Tashi to earn interest.
gUSD LP tokens are staked back in Gliese to earn GLSE - Gliese's governance token.
Users will be able to participate the governance by holding GLSE to decide the future of Gliese.

In summary, users can potentially earn yield on:

stEVMOS staking rewards.
Stable LP fees on Forge.
gUSD lending fees on Tashi.
Staking stable LP position tokens to earn GLSE on Gliese.
Staking GLSE to earn more APR on Gliese.

Thus, each DeFi protocol on EVMOS (Stride, Forge, Tashi) are connected and united, we are no longer isolated islands. EVMOS DeFi now works symbiotically to seek growth together.

Project Specification

We propose bring Gliese Finance on Evmos to:

Allow minting gUSD by staking stEVMOS.
Enable stEVMOS to continuously earn yield while also unlocking gUSD for additional yield.
Integrate gUSD into Evmos DEXs (Forge) and lending pools (Tashi).
Algorithmically manage gUSD supply and redemptions.

Team Introduction

Patrick: STEPN's senior full-stack developer. Rich experience in Dapp development for EVM-based Chain and Solana Chain.

Linrz: Wiredcraft, Full Stack Engineer. Worked for Xmind, Hilton APAC, Public Groupe.

Richard: Amazon, Full Stack Engineer.

Shin: Meta, Software Engineer.

Aaron: Gilese business & product. joined crypto space since 2019, been ambassador for few layer 1 project. An EVMOS community member since launch, EVMOS Telegram Chinese channel Mod + EVMOS Wechat group creator.

Background

We previously proposed “building a decentralized perpetual DEX prop 147 in June 2023, but it failed, mainly because we asked for a large percent of funding to kick start the project without delivering milestones first. We learned from that.

After months of market research, we believe LSDFI is what Evmos needs to boost DeFi wheel in EVMOS.

This time, we only ask for minimal infrastructure fees to kickstart the project - 1% of EVMOS from the asking.

Obstacles

Two of the core smart contract will have to be developed by the Gliese team due to the BUSL-1.1 license. Afterward, the rest of the functions can be forked from due to those are under either GPL-3.0 or MIT license.
Customizing mechanics and economics for Evmos specifically will be challenging.
We will also need to find a way to mock stEVMOS asset to test functions on Testnet, since Stride assets are not available on Evmos testnet.
We need to get stevmos price feed from various sources, for now we think fetch from forge , stride and osmosis, then weight of these 3 price feed to avoid price manipulation. or soly rely on the stride's redemption rate use the other 2 as backup source. however, stride currently have some issue on stevmos redemption, hope it could be fixed soon.

Project Goals

Short Term Goals

Develop functions to fit Evmos parameters
Test protocol on Evmos testnets
Integrate gUSD with forge and tashi on testnet
Launch gUSD on Evmos mainnet.
Implement a gUSD minting cap on a phase basis to carefully assess the protocol's stability.

Mid Term Goals

Expand gUSD integrations and usage
Decentralize governance to DAO
Scale gUSD market cap and liquidity

Long Term Goals

Multi-chain gUSD bridging
Support various version of liquid staked evmos.
Support lido’s staked rebased evmos after they come to cosmos.
Support liquid cosmos ecosystem assets as collaterial.
Position as leading Evmos LSDFI protocol.

Fund Utilization and Distribution

Amount of Funds Requested

Project Development:

1,056,000 EVMOS from community pool , The amount is calculated by the Monthly Volume Weighted Average Price.

Protocol Audit:

An optional follow-up community proposal to sponsor the audit will be submitted.
This is because the costs are fixed in USD, and it is advisable to minimize EVMOS price volatility over a shorter period (5 days) rather than a 1-2 month period. This approach ensures that the requested amount does not exceed the budgeted limit during the on-chain voting period.

Fund Utilization Plan

Core Protocol Development: 60%
Marketing & Operation: 10%
Regulation & Compliance: 10%
Infruas: 10%
Liquidity & collaterial: 10%

Fund Distribution Method:

Kick Start- Immediately after this proposal has passed - 1%

Release upon passing the proposal to kick start the development to pay for the domain/website hosting/server/ infra costs.

Milestone 1 - Testnet Release - 15% - Time Frame: 1 - 1.5 month

Deploy the Protocol (Contracts/Frontend/Backend) to the Evmos Testnet.

Milestone 2 - Open Source the Code - 10 % - Time Frame: 1 week

After ensuring that there are no major vulnerabilities on the testnet, we will release the codebase as open source.

Milestone 3 - Mainnet Launch - 54% - Time Frame: 1 - 2 Month

Deploy the protocol (Contracts/Frontend/Backend) to the Evmos Mainnet.

Milestone 4- Growth & Adoption - 10% - Time Frame: 2 Month
Milestone 5 - TVL Growth - 10% - Time Frame: until 300k gUSD minted

Multisig Wallet Signaturies:

<Strong>Safe Wallet: evmos:0x64465C82a6B81e6d4190Ec1969ec0EF7f131F99a

Prop 206: Community to Sponsor Development of LSDFI on EVMOS