Incorrect peg for uAD when protocol is deployed

Summary

The developers mentioned that uAD is 100% collateral backed.
To ensure it, they are backing it with an equal amount of 3CRV in the curve pool during deployment.

There is a circular dependency that happens when deploying the protocol:
- To mint uAD from Ubiquity Pool, we need the Curve pool for TWAP.
- To create the new uAD-3CRV Curve Pool, we need to mint uAD from UbiquityPool.
To solve this issue, the developers intended to directly mint the initial uAD tokens and then supply them with an equal amount of 3CRV tokens to create the curve pool.
The issue lies in the fact that uAD is worth $1 but the 3CRV token is $1.03.
Additionally, the value of the 3CRV token increases as the fees get collected in the Curve's 3Pool.
Therefore, from the beginning, the uAD is pegged to $1.03 instead of $1.

uAD is pegged to $1.03 instead of $1 during deployment.
The value of 3CRV tokens is $1.03 and rising (reference), so you are supplying 10k uAD ($1) with 10k 3CRV ($1.03).
The value will be unbalanced: uAD ($10,000) and 3CRV ($10,300)
Code Snippet
It is necessary that the amounts are exactly equal to set the pool as TWAP oracle. This is necessitated with the following condition:
```
require(_reserve0 == _reserve1, "TWAPOracle: PAIR_UNBALANCED");
```
Tool used

Manual Review

3CRV is an LP token, not a stablecoin. And uAD maintaining its peg to $1 is quite important for it to qualify as a "stablecoin"
Hence, the uAD should be backed with a stablecoin, like DAI, USDC, or LUSD to ensure it is pegged to $1

Duplicate of #59

sherlock-admin2 commented 10 months ago

1 comment(s) were left on this issue during the judging contest.

auditsea commented:

Threasholds can be controlled to hedge LP price deviation, LP price should represent dollar price better than individual underlying token price

sherlock-admin2 commented 10 months ago

1 comment(s) were left on this issue during the judging contest.

auditsea commented:

Threasholds can be controlled to hedge LP price deviation, LP price should represent dollar price better than individual underlying token price