MIP20: Target Price Adjustment Module (Vox)

Hahaha, @lix I like your spunk

1 Like

If we implemented this, right off the bat DAI would be ejected from all of the curve pools which represents the vast majority of DAI liquidity. DAI demand would go down, but so would supply because it would be tougher to get DAI into a useful, real world asset (like USD). I think DAI needs billions in circulating supply and a self-sustaining, circular economy before it can safely transition to a free floating currency.


I mean, AMPL is starting to be used by defi… would this really hurt our reputation that much?

Is there any scenario where the Target Price Cap wouldn’t be set to 1USD? This is not really a technical question because I would prefer it configurable, so I’m more so just asking from a governance and clarity standpoint.

My understanding for why there is a cap and not a floor, is that we would use the cap to return to 1DAI == 1USD and then move to a DSR from then onwards. So DAI would ideally only temporarily trade 1USD, limiting the damage to the social contract around 1DAI == 1USD

1 Like

@OliverNChalk The reason for having the Target Price Cap is exactly as you say: in the future it is very likely that we will have positive interest rates again, and then we will have the option of returning the Target Price to $1.00 by running a positive Target Rate for a while until $1.00 is reached, switching to DSR thereafter. Technically speaking, the cap allows us to target an exact number, since otherwise timing the rate change to fix the price at an exact level will be impossible.

It seems unlikely that we would want to return to a fixed price other than $1.00, which is also why there is no price floor in the suggested implementation.


Hi, it’s been awhile since anyone talked about this, and personally I am very excited about this MIP!
Is there a planned date for when this will get an onchain vote?

There is IMHO no point in even discussing a negative interest rate. You can’t cure a craze like DeFi with some “rational” tweeks to the stability fee. The two do not even remotely compare. You will just end up damaging Dai instead. With regards to the peg the Maker community will just have to onboard more collateral.


Honestly, a new liquidation/auction system and lower CR/LR will solve a LOT of Maker’s current problems.


Negative interest rates are natural, you are advocating for the unnatural by artificially subsidizing DAI holders. I would like your thoughts on the damaging effects of negative interest rates, compared to DAI’s current inability to return to the peg.


Going to revive this thread, since I was thinking about it earlier today.

If I understand this correctly, it’s important to realise that slowly reducing par has an influence on the market price of DAI (which is why we’d want to modify it.) But it doesn’t instantly change the market price. The only way this breaks the peg in practice is if we leave it turned on after DAI reaches $1. For most users of DAI, this should be positive, as it will help keep DAI at peg.

The only DAI users that wouldn’t want this are DAI holders that purchased DAI above peg, and that’s kind of the point, we want those holders to sell to push the market price down. Users of DAI aren’t harmed by this unless DAI falls under the peg, in which case we turn it off or reverse it.

In practice turning this on is exactly the same as minting unbacked DAI (except that system technically supports changing par, so it’s actually possible). DAI is no longer worth $1 of collateral at shutdown, but it is worth whatever the market will pay for it, which is still currently >$1.

The more I think about this, the more the meme of ‘this is suicide’ makes less sense to me. The only real downside to this is that it (hopefully temporarily) makes DAI not fully backed by collateral, and that this is potentially damaging from a PR perspective. In practice this only affects users in the event of global shutdown, in the meantime, DAI is worth whatever the market will pay for it.

I don’t think this is true. From a governance perspective, the aim is still to peg DAI to $1. If the market prices it below a dollar, we’d reverse course and push it back towards $1. This is no different from Tether. General opinion is that Tether is not fully backed, but it’s still widely used, and it trades for $1.

Regardless of whether we ever turn this on though, this MIP just gives us more options, it’s hard to see the downside to that.


I think we should add the Vox for this exact reason. I don’t think we should turn it on at this stage, as that could carry heavy implications about what DAI is or how it’s perceived, but it gives us options down the road.

Since we last had this debate, the yield farming craze and other macro economic conditions have lead to even more demand. We seem to have now stalled that demand with the 101% CR stablecoin regime around 900 million DAI and a $1.01 peg. This is obviously a high risk solution that can only compensate the protocol for a short period of time so long as fees are above 0%. So we have a small high-risk window where we’ve put the peg on rails at 1.01, and we can probably continue this regime for the peg until we exhaust all available stablecoin supply, but this will increase risk exposure for the protocol and, as fees go to 0%, leave the protocol starving.

But don’t despair! There are a number of irons in the fire that will drastically increase the supply side and possibly get us back to that $1.00 peg. Many of these ideas are a few months out, which is about the same timeframe where rates for stablecoins will need to go to 0%. And this make-or-break moment for this strategy is where I would like us to consider getting this tool ready.

To be clear, I am not suggesting we use the Vox when we get to this point. I am simply suggesting that governance hedge all possible peg management solutions so that we have as many tools available should we need them. I suggest we move forward with this tool’s deployment into the protocol, but don’t turn it on. This thread is full of examples where just the threat of possibly using this tool to defend the peg may cause markets to adjust. And, if all our other paths to fix the peg by growing supply in real world assets, stablecoin collaterals, and [REDACTED] bear fruit, then we won’t need to use the Vox.

As for the smart contracts domain team. A number of us have reviewed this proposal, and the code, and think it is technically sound enough for inclusion in the protocol.

I would suggest we move forward with this MIP. This is the moment if we want to move forward with this for October.


This was the same exact reason I proposed the protocol just mint DAI with no backing and set it aside (do nothing with it). See if the markets even react to the idea of us doing this much less freeing the DAI.

I will say what I heard from the community was an emphatic NO do NOT break the 1:1 DAI:1USDcollateral value here.

Yet every day the PEG is at 1.01 is a day of stablecoin stablity fees that are worthless promises to the system.

I am coming to believe that 6 months down the road we are going to be looking at a much bigger problem and all we will have left is devaluing the PEG to have any hope of getting it to 1. We don’t even know how the markets are going to react not just if we threaten it, but if we really use it.

For a whole week the markets ignored a 7% dent in the 1:1 DAI:collateral backing after Black Thursday. I could only speculate why as most efficient markets should have put the DAI price below 1 vs. above it.

Rather than go on. I agree with @LongForWisdom and @cmooney It is time to get this warmed up and ready to go because it might be the only tool we have left at some point to even try to bring the PEG to 1.


I support adding more tools to our monetary policy toolbox, even if we don’t utilize the Vox right away.


Thank you to all who provided their thoughts, questions, and feedback. I am formally submitting this MIP for the October governance cycle.


Chiming in briefly on this thread to say that Paradigm supports implementing MIP20 to make VOX available to governance. We view this as a separate discussion from when/how negative interest rates should actually be enacted.

We think it is valuable for governance to have VOX as an option that could help avoid emergency shutdown in certain edge cases – such as some actor cornering the market for DAI, or stablecoins becoming suddenly unavailable as collateral. Just the credible ability to enact negative rates may make scenarios like the former less likely.

One concern we have with MIP20 is that its implementation potentially lowers the social activation energy for governance to enact negative rates. This could make it more likely that they are used outside of true corner cases (fundamentally altering the user’s relationship to DAI as a $1 asset in the process). This is essentially the point Rune made here.

Actually, in our view, the empirical ability of other monetary policy tools to get us through the recent period of instability and back to a positive rate equilibrium should raise the bar to using VOX in the future.

We also hope that the implementation of VOX will not preclude governance’s exploration of alternative/additional policy tools to address situations where negative rates may be a solution, but not necessarily the best or only one.

To recap, Paradigm supports implementing MIP20 to make VOX available to governance, and we think that activation is a separate discussion which should not be conflated with this vote. Thanks @equivrel for all of your work on this!


Since the vote to implement Vox passed in the October MIP Bundle, the Maker Foundation Integration team has been in touch with numerous integration partners to gauge the impact of changing par through Vox on existing integrations.

Our findings is that par is not a well understood concept of the Maker Protocol, mainly because it has never changed in the past, why many integrations in the ecosystem do not account for the fact that it is an important variable in the system, that can in fact be changed.

Consequently I would advise that if Maker Governance was to ever change par, whether it being through Vox or in general, that it provides the ecosystem ample time to carry out upgrades to ensure integrations do not break. At least 2 weeks heads up would be necessary for integrators to update their systems, but even longer would be preferred. The Integrations team is already actively working with partners to ensure that all integrations support a changing par and that this concept is well understood in general.


Thank you for the update @lollike – really appreciate you keeping the Maker Community posted.

With regards to the reaction of our integration partners–would you say their reaction is positive, okay, lukewarm, or not so welcoming? Not sure if you can disclose–but I would imagine they will adjust–even if its a learning curve and a time-consuming process.

As someone who voted for such (it was against my better judgement)–I’m getting a little bit of “buyers remorse”, but maybe I’m just overthinking it. Not that my pleb vote would have changed the outcome :smiley:

I guess when I think of the possible outcomes–I always think of the Japanese stagnation era… not sure why. But you gotta have faith…

To be honest, most don’t know about Vox. Their primary interest is in Dai peg and liquidity, and many are much more curious about RWA, other upcoming collateral, and PSM.

Following up here for the MIP tracker, is there any work that needs to be done to make the use of Vox possible? Obviously to actually use this parameter would require an extreme market situation, but should such a situation occur imminently would we be able to change the “par” or is there work on GitHub that would be required first?

1 Like

Although it was accepted in the October MIPs bundle, I don’t know if it’s actually implemented yet, or if it’s something on the SC team to-do list.

@BrianMcMakerDAO do you know?

Also, given Lolike’s comment, I think a process MIP for proposing vox would be appropriate. @equivrel, thoughts?