[Informal poll] DeFi Summer 2021 by MakerDAO

Alternative slogan: Maker ETH ATH again

Currently, 42% of DAI is backed by fiat-backed stablecoins. Additionally, we are not super competitive with Aave/Compound. The last crash depressed lending rates and leverage seems on the fall. Institutions are coming strong so I don’t think rates will go back to double digits for a long time anyway. Liquidation 2.0 showed it’s working well.

I think this is an opportunity to push significantly rates down and do a marketing push at the same time. I would suggest that we push SF to 3% for ETH-A and WBTC-A and 0.5% for ETH-C for 3 months (the summer). Such commitment would be stopped if PSM-USDC goes below 500M (which is thought is a good buffer to have) as the DAI peg is of paramount importance.

We should still be profitable (I took 32M of expense from makerburn because the MKR compensation is really unclear yet anyway but that gives you an idea).

I made a quick spreadsheet here.

Taking such a bold move makes sense only if we are united as a community to push the campaign (otherwise we will end up in the worst case of the spreadsheet). We still have some funds in the interim multisig to pay for a design piece I guess.

Should we launch the DeFi Summer by MakerDAO?
  • yes
  • no
  • abstain

0 voters

The MOMC is meeting on Monday, so now is the time to influence :slight_smile:

13 Likes

Yes please, 100%!

Lowering rates is a great way to boost DAI supply, get it below the peg and get that USDC out of the PSM. All for it to at least try and see if this works!

Any reason ETH-B is excluded from the rate lowering?

2 Likes

Big fan of this. I’ve been concerned about the relatively unchecked growth in reliance on PSM for a while. We’ve just come through a major stress test with flying colours. Now’s the time to really push to increase DAI supply from non-PSM collateral types.

@AstronautThis I’m not sure why we would bother lowering ETH-B rate given that it is at DC. I would definitely be supportive of raising ETH-B debt ceiling though. There’s clearly a demand for it and why shouldn’t we be the ones to meet it?

We would almost certainly need to raise stability buffer if embarking down this road too.

3 Likes

It depends how is the marketing push looks like, is it a campaign to push us more in general in the spotlight? (Wich would be great! ) then yes! I agree that we are underrepresented in the space.

I’ll have to think more carefully about it, but we definitely need 1) to grow fee-producing DAI, and 2) more inflationary pressures.

So yes, this seems like it is worth a try.

I’d like to know more about how we would let people know.

Quite some here have a Twitter account. @seth can write something. If we are pushing enough it might be newsworthy and we have some contact at some media.

If we are not able to make us heard when we are giving a 0.5% SF facility and triggering the DeFi Summer, we don’t deserve a $3B market cap.

5 Likes

Voting yes in support of the general idea. As mentioned in some other comments and the original post, this is going to have to be a coordinated effort from multiple core units if it’s to work.

I also wonder… is there a way to more directly incentivize refinancing from a competing platform?

4 Likes

I would decrease ETH-b to the previous rate 9% too, I wouldn’t like to be the guy that sees all rates going down except mine. Eth-b will have a DC of 100M too if I understand correctly the spreadsheet.

Can we also think about what are we going to do when the PSM get back to something normal, if it does? What is normal 100M/ 200M / 400M?
Which DC and which tout/tin?

Side note if the tout is at 0 we won’t increase the dai supply before we empty the PSM.

1 Like

Is that so bad though? I’d rather see the PSM empty than Dai supply go up, if we are somehow able to do that.

Right now, Dai supply is high but this is just an artefact of the PSM filling up. It’s not the way growth should be achieved.

I think it is a half/half, if dai supply get higher is good for MKR as dai might pass back busd and jump from 4th to 3rd position and that will balance the income lost. But too much usdc is bad too.

I think we should decide the amount, the dc and the normal tout.

With the current tout set up at 0 we will sell usdc before the dai get to 1. Which is good in away as we sell before the curve of “curve” gets flat but not that great as the dai won’t be at peg until we empty the PSM. And then we won’t have any usdc to maintain the peg on the way down.

I can hear the “we have other tools to maintain the peg on the way down” but no tools is as precise as the PSM to maintain the peg at 0.001 constantly.

When I combine this with other proposals where a raise of SF is sought just because other protocols charge more, I get the feeling that we are “wavering”. I certainly don’t want our users to get the feeling they are being lured in with a low rate and subsequently find themselves with continuous SF increments. Looks to much like a TradFi practice IMHO.

I think we could consider raising gaps for the ETH-A and WBTC vaults in conjunction with these rate decreases.

Yes correct, can we decrease/adjust the TTL too?

1 Like

A courageous initiative!

However, I voted No and here is why:

  1. In the present market situation, reduced fees could make perfect sense on their own without the additional argument that we are starting a marketing campaign.
  2. Using marketing as the reasoning behind lower fees would make the decision appear political instead of relying on the Rates team to use their sound judgement. Maybe at a later stage.
  1. Overall, stablecoins are presently in the strong growth phase natural to successful new products. Accordingly, it makes little sense to start a zero-sum marketing campaign directed at taking market share from Aave/Compound when there is plenty of growth possible by simply growing the total market. It is just like playing Civilization or any other 4x strategy game - you do not start a war with neighbours while there are loads of tiles still available.
  2. Maker presently does not have a marketing team, some would say we never had one, able to exploit such an initiative. First, we need a team with the necessary power levels, both in terms of quality and volume, in the relevant channels. Second, they would need time to plan the campaign in terms of cost and duration, and thirdly we must think through beforehand what the countermoves our competitors could use. So I think it is too early yet.
4 Likes

Voted no, though not because I don’t like the idea.

Marketing should follow a fall in rates that results from an independent governance decision, not be the reason for the fall.

Of course, if that decision is made, the community/CUs should absolutely make the most of it.

2 Likes

Yes I agree, it is not about marketing. For me it just makes sense as currently we have nearly half of our supply at 0% and without any strategic reason.( Previously, the main reasons were that we still earnt more with a high eth rate, the second was the liquidation v1 risk, all of them are gone now).
I think putting ETH-C at 0.5% or even lower bring now more value than USDC at 0%. Especially that we have liqV2 vs no liquidation. We also are going to growth the dai supply by putting the dai price down and increase our customer base.

With the rate proposed I do believe the spreadsheet is a wrong estimate as we are also going to growth the dai supply massively. But for that we must allow the dai to go down to 0.9994 as previously allowed with the initial PSM set up.

In addition of it, if we can bring the dai around 0.9994 we would be able to start the stablecoin vault liquidation smoothly.

In light of this point, maybe it’s worth asking how much of the DeFi Summer initiative is a simple rate change (which I think more people are in favour of) and how big a part of it is the marketing?

1 Like

I think that is the point, I am not sure everyone is/was in favor. I think Seb just tried to make it sexier. May be it wasn’t necessary but you can’t know it before :wink:.

2 Likes

If we cut rates aggressively (mainly on the income we will lose) and commit to 3 months (those are rates change and guidance parts), I think making some noise is not bad to add.

It’s not even about going after the competition, it’s just about just being heard so that this new rate finds the way to customers. And try a bit of team play. Nothing fancy, one piece of content and some tweets on Crypto Twitter …

Some have already started and they are not marketing people.

4 Likes

Two weeks is a long time in crypto! DAI is now 52% backed by USDC alone.

I see that when the new executive passes we will be lowering rates but just wondering if the DeFi Summer rates can be even more aggressively lowered to try and get the markets to go wild with vaults and boost DAI supply? Does the state of the PSM warrant additional lowering?

1 Like