TranchessDAO #8 - Changing the Utility Stablecoin for BISHOP & ROOK on BNB Chain from BUSD to USDC

Proposal
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Summary

This proposal is the second step of the previously approved proposal.

In addition to the APR oracle reference, Tranchess utilizes stablecoin, currently BUSD, to enhance liquidity for BISHOP and ROOK. Specifically, users can swap BISHOP/ROOK with BUSD or vice versa. There are three liquidity pools for the three BISHOP tokens on BNB Chain, all in the form of BISHOP-BUSD. With the imminent support for BUSD wavering, we propose to change the stablecoin used on Tranchess from BUSD to USDC on BNB Chain*.

*The stablecoin we use on Ethereum is USDC and is not affected by this proposal.

Abstract

In June 2022 when Tranchess V2 launched, BUSD was selected as the stablecoin for the platform, facilitating the swapping needs for BISHOP and ROOK on BNB chain. The decision was made after we compared various parameters such as size, liquidity level, and adoption rate on BNB Chain among several stablecoins and BUSD stood out as the proper fit.

Since Paxos released its statement on BUSD in February, we’ve been closely monitoring the liquidity level of BUSD on lending protocols of BNB Chain and its usages within the overall BNB Chain ecosystem. With Chaos Labs’ proposal on Venus governance on halting the BUSD pool and us changing the underlying stablecoin of the APR oracle, we propose to change all BUSD utilities on Tranchess to USDC for consistency as well as risk management.

The main reasons of choosing USDC as the substitute stablecoin are:

  1. USDC’s lending pool on Venus runs at a stable and ample liquidity level, which is essential in maintaining a fair and reasonable supply/borrow rate, crucial for our interest rate calculation and BISHOP/ROOK’s adoption.
  2. Based on historical performance, USDC runs a relatively lower depeg risk as a stablecoin.

For security reasons, the Tranchess dev team has already tested the changes on testnet to ensure proper performance. No actual change for the liquidity pool has been implemented.

Here is the timeline for the proposal and the changes that would take place if proposal approved:

  • Voting is open from 10:00 UTC, November 7 to 10:00 UTC, November 15, 2023.

  • If the proposal is approved, Tranchess will update the contracts of the BISHOP liquidity pools as well as the swapping functions for BISHOP and ROOK by 14:00 UTC, November 16, 2023.

  • New smart contract addresses that would be added:

    • USDC FeeDistributor: 0xa80287d7183e23D460AC01f05C1b7f3d0FB76Ea2

    • bBISHOP-USDC Swap

      StableSwap: 0x6Da3A029d0F0911C7ee36c1cEa2Ea69Fc31dd970

      LiquidityGauge: 0xF2A64F6Fbd72a51EC1963593fF78b742B35D0A38

      SwapBonus: 0xb48D3CD9B1C34c204Ce2e2d9bB7aCcaA937F0bba

    • eBISHOP-USDC Swap

      StableSwap: 0x09427783666Ec4173e951222ab9B3C12871400AA

      LiquidityGauge: 0x74c8A2E9bc849F023aD15339A5f5e47675b3d633

      SwapBonus: 0xa703768EEC79CfD3b442539FbDAAFC8cfA723f52

    • nBISHOP-USDC Swap

      StableSwap: 0xD3392699d679DFa57bC8ee71a0Ad44902C1Ab9f7

      LiquidityGauge: 0xF71caD58e91b5f4FAfe19Fdc4FE747E2eBBd5aFe

      SwapBonus: 0x4871782098eF453226b6Bea633280c4533d78BaE

  • The migration process:

    • The following changes to the smart contracts would take effect post 14:00 UTC, November 16:

      1. Add the three new LiquidityGauge to SwapRouter’s allowlist.
      2. Add the three new LiquidityGauge to ControllerBallot’s pool list.
      3. Disable the three old BUSD LiquidityGauge in ControllerBallot’s pool list.
      4. Add the three new LiquidityGauge to ChessSchedule’s minter list.
      5. Add the three new LiquidityGauge to VotingEscrow’s callback handler list.
      6. Add the new USDC FeeDistributor to VotingEscrow’s callback handler list.

      After the above steps are completed, users would be able to add liquidity to the new pool, as well as vote for the new pool under governance.

    • Starting from 14:00 UTC, November 23, the new USDC swapping pools will start to receive CHESS emissions. No CHESS emission would be distributed to the old BUSD pools anymore.

    • The following changes to the smart contracts would take effect post 14:00 UTC, November 30:

      • Remove the three old BUSD LiquidityGauge from ChessSchedule’s minter list.
      • Remove the three old BUSD LiquidityGauge from VotingEscrow’s callback handler list.
      • Remove the old BUSD FeeDistributer from VotingEscrow’s callback handler list.
      • Pause the three old BISHOP-BUSD pools.

    After the above steps are complete, all swapping functions in the BUSD pools would cease. BUSD pools would only support the removal of liquidity.

Motivation

The ongoing deprecation of BUSD by Paxos and the general usages of it by BNB Chain ecosystem is leading to an increased liquidity risk. Changing the swapping stablecoin for BISHOP and ROOK protects token holders, thereby ensuring a long term sustainable and healthy ecosystem within Tranchess.

For

Changing from BUSD to USDC protects BISHOP and ROOK holders from any future risks that might happen due to BUSD’s deprecation.

Against

USDC is not the best stablecoin to adopt in this scenario.

Please click here to vote on Snapshot

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