PGP-XX: Prepare for the Mimo loan repayment

TL;DR : Decide on a strategy to repay the remaining debt.

Context & Rationale:
In March 2023 we refinanced a loan with Mimo Labs that inherited bad debt from a loan Angle made us in May 2022. This loan was progressively trimmed from 320,000$ to 180,000$, at which point we were asked to stop repaying until full maturity of the loan.

The loan’s reimbursement is coming up on march 17th and I thought it could be relevant to open up a topic in order to round up the required funds.

First of all, it is important to remind everyone that the loan was over collateralized by multiple assets, namely Curve PoL, yCRV and ETH (currently sitting at 2.7 HF). You can find the collateral at the following address: 0x8b08b1e10a8189b7c8840f0c3dd7687b2ba7468c.

Currently the collateral without the PoL amounts to:

  • 12 ETH (worth 29,000$)
  • 5800 DAI (-5500 for the last 2 months of interests)
  • 17,500 CRV (worth ~8000$)
  • 232,215 yCRV (worth ~97,200$)

= 136,000 $

Observation 1: 80% of the non-PoL collateral is CRV denominated, so most of the repayying scenarios are highly dependent on CRV price action.

Observation 2: Yearn had a liquidity incident in november that nuked the yCRV peg to 88%, it is unlikely this issue is fixed before our loan maturity.

That means there are 44,000$ more of debt to repay. Depending on price volatility this might end up being more or less, which is why it would be wise to envision multiple scenarios:

Scenario 1: CRV keeps tumbling - very unlikely

CRV is offering 7% APR just in admin fees, with no sign of revenue going down, looking at the price action seems to indicate there is some kind of hard floor around 0.40$.

In the case CRV ends up in these waters, we will have to liquidate all our CRV and find an extra 80,000$ outside of the collateral. I can either come from reducing PoL, liquidate WAR holdings or vlAURA holdings.

My personal order of liquidation of assets is the following:

  1. WAR
  2. 50k$ of PoL
  3. vlAURA
  4. Rest of PoL (extremely unlikely)

Scenario 2: Crab market - likely
In this case we would need ~40,000$, in which case I would recommend to liquidate WAR holdings.

Scenario 3: Noticeable positive price action - unlikely
Considering Curve is on the verge of releasing LlamaLend, we can expect CRV to start moving. In this case, here are the targets we should monitor:

  • 0.56$ (likely) → full repayment possible if yCRV repegs (very unlikely) or 18,000$ missing for full repayment;
  • 0.63$ (improbable) → full repayment with all collateral outside of PoL;
  • 0.75$ (unlikely) → full repayment with ycrv + crv;
  • 0.86$ (very unlikely) → full repayment of the loan with just yCRV;

The idea is to open a discussion on the topic and craft a proposal by the end of the month in order to be set on our strategy.

Hey, can you elaborate on the reasoning behind this choice ?

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It’s from least strategic to most

I don’t really understand how PoL is less strategic than vlAURA ?

The vlAURA holds 200k of TVL so it makes sense to favor it to 50k tvl, no?