MeroTriHopCvx

Note

Strategies rely on external protocols and come with their own risks. Users should carefully evaulate the strategy design and the risks associated with any protocol that a strategy interacts with. While strategies are designed to be robust and secure, users may still be exposed to the risks of external protocols.

General info

  • Name: TRI-HOP-CVX

  • Underlying (asset to farm): [USDC, USDT or DAI]

  • Reward tokens: CVX, CRV

  • Support other reward tokens: True

  • Description: This strategy provides single sided liquidity to Curve’s 3pool. Then uses the LP Token 3CRV to provide single sided liquidity to a Curve Meta Pool, for example MIM or FRAX. It then stakes the Meta Pool LP Tokens in Convex, periodically harvesting CVX and CRV rewards to sell for the Underlying.

Contracts

Here is an overview of which contracts this strategy interacts with and how each contract is used (on a high level).

ERC20 tokens used:

  • CVX: 0x4e3FBD56CD56c3e72c1403e103b45Db9da5B9D2B

    • Native token of Convex

  • CRV: 0xD533a949740bb3306d119CC777fa900bA034cd52

    • Governance token of Curve

  • WETH: 0xC02aaA39b223FE8D0A0e5C4F27eAD9083C756Cc2

    • Wrapped ETH (ERC20 compatible)

  • Underlying: [set per strategy]

    • Deposited into Curve 3pool as single sided liquidity

  • 3CRV: 0x6c3F90f043a72FA612cbac8115EE7e52BDe6E490

    • Minted by depositing into Curve 3pool

    • Deposited into Curve MetaPool as single sided liquidity

    • Burned to redeem underlying

  • Curve LP Token: [set per strategy]

    • Minted by depositing 3CRV into Curve MetaPool

    • Deposited in Convex Booster contract

    • Burned to redeem 3CRV

AMMs used:

  • Uniswap: 0x7a250d5630B4cF539739dF2C5dAcb4c659F2488D

    • Swap coin X for Y if AMM is set as default

  • SushiSwap: 0xd9e1cE17f2641f24aE83637ab66a2cca9C378B9F

    • Swap coin X for Y if AMM is set as default

  • Curve CVX/ETH Pool: 0xB576491F1E6e5E62f1d8F26062Ee822B40B0E0d4

    • Swap CVX rewards for WETH

  • Curve CRV/ETH Pool: 0x8301AE4fc9c624d1D396cbDAa1ed877821D7C511

    • Swap CRV rewards for WETH

Curve contracts used:

  • Curve 3pool: 0xbEbc44782C7dB0a1A60Cb6fe97d0b483032FF1C7

    • Deposit underlying to mint 3CRV

    • Burn 3CRV to redeem underlying

  • Curve MetaPool: [set per strategy]

    • Deposit 3CRV to mint LP Token

    • Burn LP Token to redeem 3CRV

Convex contracts used:

  • Booster: 0xF403C135812408BFbE8713b5A23a04b3D48AAE31

    • Deposit and Withdraw Curve LP Token

  • Rewards: [set per strategy]

    • Stake Convex LP Token to earn CRV, CVX and other rewards

Convex Background

Convex Finance is a protocol built around Curve, which essentially allows Curve LPs to receive a higher boost on CRV rewards by staking Curve LP tokens on Convex and not directly on Curve. Furthermore, CRV holders can lock their CRV on Convex for veCRV and in exchange receive cvxCRV, which is essentially tokenized veCRV. Note that once CRV is deposited on Convex, it cannot be withdrawn. However, Convex incentivizes LPs of Sushiswap pools for CRV-cvxCRV pools, by rewarding these LPs with CVX tokens. Additionally, CVX rewards get minted on a per rata basis as CRV rewards are received by Convex LPs. A platform fee is charged by Convex on CRV rewards, which goes in part to users that lock CRV for cvxCRV (and stake cvxCRV), as well as CVX stakers. Stakers of cvxCRV also receive 3CRV rewards, which are the governance fees paid by Curve on a weekly basis.

Overall there are three roles a user can have on Convex to earn rewards:

  1. Liquidity provider (stake Curve LP tokens):

    • Claim CRV rewards from Convex

    • Claim CVX rewards from Convex

  2. CRV depositor (lock CRV for cvxCRV; stake cvxCRV):

    • Receive 3CRV (Curve trading fees)

    • Receive CVX

    • Receive CRV (Convex platform fees)

  3. CVX staker:

    • Receive cvxCRV (platform fees)

Strategy Details

The TRI-HOP-CVX strategy has the following core components.

Deposits

By calling strategy.deposit(), all available underlying held by the strategy will be provided as single sided liquidity into the Curve 3pool. The Curve 3CRV LP Token will then be provided as single sided liquidity into a Curve MetaPool. The Curve MetaPool LP Token will then be deposited into the Convex Booster contract (details here). Finally the Convex LP Token is staked for CRV and CVX rewards in the Convex Rewards contract.

Reward Claiming

The Convex reward pools all implement the IRewardStaking interface. You can find the implementation of these reward pools here. Rewards are claimed by calling the getReward() method on the Rewards contract.

There may be a situation whereby a Curve pool is incentivized, i.e. LPs of the pools receive additional reward tokens for depositing funds. These extra rewards would be also be claimed through Convex on getReward(). In order to be able to process these on the strategy side, the strategy contains a list of all the possible`rewardTokens` in which it may hold funds. New tokens can be added to this list by the admin. When funds are liquidated, the reward tokens are liquidated for the underlying.

Harvesting

When strategy.harvest() is called (by the vault), CRV and CVX rewards will be claimed. All CVX and CRV rewards earned by the strategy are first taxed, where the taxed amount goes to the Mero CVX reserve and gets vote locked on Convex. The net CVX and CRV rewards earned are all sold off for the underlying.

Note

harvest() does not automatically redeposit underlying into Convex (reduce gas costs).

Balance

The balance of the strategy includes idle underlying, idle 3CRV, idle Curve LP Tokens and staked Curve LP Tokens. Any unclaimed rewards are not included in the balance. The balance function uses get_virtual_price which is a view of the Curve Pools. This function returns the price of the LP Token relative to the assets of the pool. This may differ from the actual amount that can be withdrawn from the pool at any point in time, as if the pool is imblanaced, then the withdrawable amount may be less than or greater than the virtual price. This is in place as a security measure to protect against attacks that intentionally cause imbalance in curve pools to manipulate the balance of a strategy.

Imbalance Tolerance

Providing single sided liquidity into Curve pools can be undesirable if the pool is significantly imbalanced. If a malicious actor frontran deposit and withdrawal transactions and caused an imbalance in the pool, the strategy could receive very little LP tokens when depositing, or receive very little of the underlying when withdrawing. To protect against this, the strategy uses imbalance tolerance thresholds to ensure that the pool is balanced within a range when withdrawing and depositing.

When depositing into the pool using the add_liquidity function, the min_mint_amount is set to specify the minimum amount of LP tokens to accept for the deposit. This value is set by using the get_virtual_price function to get the expected LP received for a perfectly balanced pool. Then this value is reduced by a percent imbalanceToleranceIn to get the minimum that we are willing to accept considering that the pool may have slight imbalances.

Similarly with withdrawing using remove_liquidity_imbalance or remove_liquidity_one_coin the maximum LP burned is set with max_burn_amount and the minimum underlying received is set with min_amount respectively. Both of these use the percent multiplier imbalanceToleranceOut to add a buffer on what is an acceptable amount.