Summary:
The proposal aims to introduce Parallel v3.1, bringing a reworked fee distribution process.
Context:
Parallel v3.0 introduced the concept of yield-bearing collateral in backing of Parallel stablecoins via the Parallelizer Module. However under the current architecture (inherited from the Angle codebase) the generated yield cannot be withdrawn & distributed properly from the protocol to payees (savings module, DAO treasury, etc.). Parallel v3.1 introduces a reworked fee distribution architecture.
Rationale:
Problem: When yield-bearing assets (e.g., sUSDe, etc.) are deposited in backing of Parallel stablecoins (e.g. USDp) via the Parallelizer Module, their balance increases as yield accrues. However, the normalizedStables tracking only reflects the stablecoins originally issued against the collateral, not the additional value from accrued yield. This creates a surplus where the actual collateral value exceeds the tracked backing.
Solution: We are introducing a new processSurplus function in order to calculate this surplus (difference between current collateral value and normalized stables), swaps the surplus collateral into TokenP, and then the TokenP can be released to corresponding payees set by the Governor via the release() function.
The fee distribution rework is introducing code changes limited to the Parallelizer module, others modules are not impacted (thanks to the modular architecture). Although this update does not introduce any new features from a product perspective for users, it does bring many new features and simplifications for the DAO Multisig in terms of operations, reducing the need to rely on them and thus reducing the risk exposure.
The pre-audits commit is available here.
The updated Parallelizer Module requires new audits in order to be safely deployed in production.
For the first audit, we decided to work with Bail Security, having already audited Parallel v3.0 completely, only a differential audit was necessary. The price was USD 15,000, but we obtained a discount of USD 4,000 as long-term partners, bringing the final price to USD 11,000. In order to reduce deployment timelines, we decided to pay for the audit before making the proposal (see payment transaction here). The audit began on February 26, with an initial report received on February 2.
For the second audit, we had several options:
- Conduct an audit limited to the Parallelizer Module
- Conduct a complete audit of Parallel v3, including all modules and the core protocol
Due to growing skepticism towards decentralized stablecoins (more details in our latest monthly report), we believe it is preferable to conduct a new complete audit and formal verification of the protocol. Throughout January, we requested, evaluated, and questioned quotes from numerous companies in the ecosystem. The idea was not to get the cheapest price but the fairest price for our needs.
After evaluation, we decided to propose to the DAO that we conduct this second audit and formal verification with Cyfrin for a total price of USD 120,000 (to date nothing has been signed with Cyfrin). Details of the offer: (detailed quote available here)
- Audit:
- Senior Researchers: 4
- Duration: 3 weeks (18 working days)
- Price: USD 95,000
- Formal Verification:
- Engineer: 1
- Duration: 3 weeks (18 working days)
- Price: USD 25,000
Final audits reports would be published once completed. Although this represents a significant budget for the DAO, we believe it is necessary in the current context.
Note: Cooper Labs does not charge any commission for proposing these auditors to the DAO. This is part of our mandate and our commitment to acting in the best interests of shareholders.
If approved by the DAO, Parallel v3.1 will be deployed in production where v3.0 is currently deployed.
Means:
- Human Resources: Multisig signers will need to sign transactions to execute the proposal.
- Treasury Resources: USD 131,000 in USDC on Ethereum to cover audits costs (USD 11,000 for the Bail Security audit & USD 120,000 for the Cyfrin audit + formal verification)
Technical implementation:
- On Ethereum:
- Send 131,000.00 USDC from the Ethereum Treasury Multisig to 0x876C4D1Bd31af0d99191fC896F15a3A97D71aaB3 (Cooper Labs, for legal purposes)
Voting options:
- For Parallel v3.1
- Against / Rework the Proposal
- Abstain
Sentiment poll:
- For Parallel v3.1
- Against/Rework the proposal
- Abstain
Author(s): Cooper Labs