Has anyone definitively confirmed that implementing a negative DSR is not feasible and if so why? It has now been proven beyond a doubt that launching a synthetic asset without a proper funding mechanism was silly.
If we can’t introduce that funding mechanism via a change to DSR, then the least socially damaging version of TRFM should be considered as an interim measure. Minting DAI 1:1 with USDC is not a valid peg-fixing solution.
A negative DSR also removes a lot of complexity from the system because MKR holders can choose a DSR SF spread that will be their profit, while the market will set the actual DSR and SF values. This guarantees all risk taken by MKR holders is paid for, unlike the current model where we have 140M of ETH debt not producing any income for us.
With a spread and negative DSR, we could fix the spread to 2% and the market might set the following rates:
- -3% DSR
- -1% SF
With these rates all will be resolved and harmony between parties achieved. MKR holders get paid for taking risk, DAI minters get paid for arbing, DAI holders pay for the privilege of owning DAI and whatever value that provides them.