Following up on this post from @Primoz, a few of us have been meeting for the past two weeks to try and come up with an evolution of the current rates paradigm. After discussing a few iterations we have found it is becoming increasingly difficult to pin down an exact, common formula for all asset types. Things such as the
Base Rate made sense when we are only dealing with volatile crypto assets. Now that we have stablecoins, RWAs and farming tokens coming online, we need to have completely different mechanisms for determining the
Stability Fee for each of these assets.
An idea that came up today was to move the process out of governance altogether. Instead of restricting ourselves to a rigid formula, governance could provide high-level, English instructions to the risk team such as “we want the Stability Fees on stablecoins to be 0%” which would then be factored into the weekly executive. This would give the risk team some flexibility to come up with whatever
Stability Fees are most appropriate on an ongoing basis. This is not to imply that there will not be transparency of how these rates are determined by the risk team, but it frees them up to be more flexible with pricing novel assets such as farming tokens. MKR holders, as always, can veto any changes that come up.
I wanted to put up this poll to see if the community is okay with this shift in rate setting or if we should proceed with trying to evolve the current rates paradigm.
Note: This is an informal gauge of opinion. A more formal proposal will follow after this.
- The Risk team should be given more autonomy to come up with Stability Fees
- Evolve the Rates governance constructs to take new assets into account