Mid-month Parameter Changes Proposal - PPG-OMC-001 - 2021-10-15

Parameter Proposal Group: MakerDAO Open Market Committee
Authors: @Primoz @LongForWisdom, @Monet-supply, @SebVentures, @Akiva, @hexonaut, @ultraschuppi

Overview

We are seeing a lot of appetite for DAI minting recently, especially on ETH-A, ETH-B and WBTC-A. Today, we even reached the temporary cap for ETH-A and WBTC-A so new DAI can only get minted as soon as the ttl is over.

To keep up with the demand, we propose some changes on the DC-IAM parameters for those vault-types as a mid-month parameter proposal as outlined in MIP46.

There are also some Signal Requests (here, here) running in the forum indicating that the community is willing to support this change.

Proposed Changes

ETH-A

image

  • increase gap from 100 MM to 150 MM
  • decrease ttl from 8h to 6h

The line for ETH-A is already set to 15B which should be enough. The new settings will increase the DAI (ideally) mintable from 300 MM to 600 MM within 24h.

ETH-B

image

  • increase line from 300 MM to 500 MM (source)
  • increase gap from 10 MM to 20 MM
  • decrease ttl from 8h to 6h

The new settings will increase the DAI (ideally) mintable from 30 MM to 80 MM within 24h.

WBTC-A

image

  • increase line from 750 MM to 1500 MM
  • increase gap from 30 MM to 60 MM
  • decrease ttl from 8h to 6h

The new settings will increase the DAI (ideally) mintable from 120 MM to 240 MM within 24h.

Final Note

Proposed changes will get included into the next available on-chain poll and if passed will be included in the following executive vote.

17 Likes

Usually - as described in MIP46c3 - there should be a week between a proposal being made in the forum and the proposal being voted on onchain.

As one might think that the changes presented here are not doing a real damage (like cutting the revenue by >20% as we had in the June Proposal - some might remember the turmoil we had after it since it got onchain a bit too fast) I would like to test the water if the proposed next step by @prose11 here is acceptable or not

When shall we have this proposal up for an onchain poll?

  • 2021-10-18 - next monday - the fast forward option
  • 2021-10-25 - one week later - the MIP46 prefered option
  • Abstain

0 voters

please also feel free to express your support or disagreement for the whole proposal or the fast-forward option in this thread.

cheers
tim

PS: if you are asking for changes on the SFs or something - sorry, not in this proposal. We decided to focus on the bleeding (no DAI mintable on major ilks) and not get distracted by profit maximizing or something else. MOMC will meet in 2 weeks and will have a deeper look at competitors and other factors. This was really some kind of adhoc proposal set up in a few hours with people in multiple timezones. I hope you still like it.

4 Likes

Let’s push this through yesterday :slight_smile:

4 Likes

Given that we’re able to have this announcement up over the weekend and relatively low protocol impact of the recommended changes we will have this proposal up for polling on Monday, October 18th assuming the poll passes.

We welcome as much feedback as possible before and during the poll, and as always please let me or @LongForWisdom know if you have questions or concerns about the Governance process for this or anything else. You can also reach our anonymous suggestion box here.

5 Likes

Respect !!

3 Likes

Priorities…

3 Likes

Family comes first…

3 Likes

Support to get this pass asap. DAI has to remain available to mint as much as possible, hitting debt ceiling and having to wait for hours is not desirable

3 Likes

I wanted to share some notes on risk considerations for changing DC-IAM parameters. TL;DR: I believe risks remain low after these proposed updates.

Undercollateralized Minting Risk

If the price of an asset falls sharply within the one hour oracle security module (OSM) delay period, it’s possible for Maker to experienced undercollateralized minting - the system allows users to borrow DAI with insufficient collateral due to delayed oracle price. Increasing the GAP parameter allows for additional minting and better user experience, but also increases our maximum losses from this risk.

Charts below show potential MakerDAO losses from unbacked minting based on the severity of the intra-hour drawdown. Unless an intra-hour drawdown is extremely severe (over 30%), only the ETH-B vault type would be at risk from undercollateralized minting.

This suggests that ETH-B possess the highest risk from increases in gap parameter and may benefit instead from lower ttl (cooldown), which allows for a similar increase in daily debt exposure while maintaining lower risk during rapid price crashes.

Current DC-IAM parameters:
image

Proposed DC-IAM parameters:
image

Net impact of parameter changes:
image

Debt Exposure Growth

The figure below shows metrics for how quickly debt exposure could grow for covered assets, before and after these proposed parameter changes.

The Days to LINE parameter shows the number of days it would take for debt exposure to hit the LINE (maximum debt ceiling) parameter. Assuming Maker is willing to take on greater exposure to collateral assets, we should ensure that Days to LINE is at least equal or greater than the current governance security module (GSM) delay - this allows governance to react by increasing LINE parameter without business interruption.

Growth in GSM shows the maximum amount that DAI debt could increase during the current length of GSM delay. This could be relevant if governance wanted to either increase or reduce exposure to a given collateral asset on short notice.

Data is in a google sheet here: DC-IAM Parameter Risk Management - Google Sheets

9 Likes

Excellent work. Thank you.

2 Likes

This is now on-chain: https://vote.makerdao.com/polling/QmP6GPeK?network=mainnet#poll-detail

3 Likes

Proposed changes made it through the onchain poll, were included in the following executive, this passed as well. Changes will be in effect in a bit less then 48h.

Thanks everybody for participating.

3 Likes

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