Based on the outcome of the on-chain poll to implement DC-IAM for other vault types, we are releasing the first batch of proposed DC-IAM parameters for larger vault types. Both ‘gap’ and ‘ttl’ values below are based on the same decision making process and intuition that we already described last week when proposing these parameters for ETH-A. We basically look at historical net minting behaviour of these vault types to define the appropriate ‘gap’ value, whereas ‘ttl’ value is proposed to be unified for all vault types.
‘Line’ parameter on the other hand is a bit more tricky and the most important parameter here. ‘Line’ in our mind corresponds to a number that fits our Risk Premium calculations and basically represents a “maximum debt ceiling where rates start reaching double digit values and beyond and is no longer intended to increase debt exposure beyond these levels”.
Since our ‘line’ estimates are based mostly on liquidity of these collateral assets and to some degree on subjective qualitative assessment of assets, we would want to Signal for appropriate ‘line’. Below are base case calculations our models are estimating, but we decided to Signal for alternative ‘line’ parameters (cca. -30% & +30% from proposed values).
For instance, the model is proposing 140m max. debt ceiling for LINK-A, since LINK is one of the most liquid ERC-20 assets. However some might prefer lower maximum exposure to LINK due to various concerns. On the other hand model estimates “only” 350m Maximum Debt Ceiling for WBTC-A, but the model only partially includes real BTC liquidity being the underlying asset of WBTC. If one is confident about WBTC being instantly redeemable for BTC by keepers in large quantities, ‘line’ for WBTC-A could be higher.
Proposed DC-IAM Parameters
| Vault Type | current DC | DC-IAM line | gap | ttl | |------------|--------------|-------------|------------|----------| | WBTC-A | 210,000,000 | 350,000,000 | 15,000,000 | 12 hours | | LINK-A | 20,000,000 | 140,000,000 | 7,000,000 | 12 hours | | UNI-A | 15,000,000 | 50,000,000 | 3,000,000 | 12 hours | | COMP-A | 7,000,000 | 10,000,000 | 2,000,000 | 12 hours | | YFI-A | 30,000,000 | 45,000,000 | 5,000,000 | 12 hours | | AAVE-A | 10,000,000 | 25,000,000 | 2,000,000 | 12 hours |
- 350m - Proposed value
- 140m - Proposed value
- 50m - Proposed value
- 10m - Proposed value
- 45m - Proposed value
- 25m - Proposed value
- 35m ‘line’ be?
This Signal will be closed on Friday, February 5th. Winning votes will proceed to on-chain poll next Monday, February 8th. Potentially we might propose to include proposed DC-IAM changes for WBTC-A in this Friday’s Executive Vote if debt utilization gets close to full.