We are struggling with keeping up with the DAI demand and trading off the risks for some time already. I guess we can all agree that driving stability fees to 20% and increasing the stability buffer to infinity is not a sustainable way, so I was trying to find a possible help on that topic for some time and I would like to bounce around this idea with all of you.
In case of a sharp dip, our biggest risk is that too much DAI needs to get
flipped because vault-owners don’t pay enough attention and cannot deleverage quick enough. What if we could offer a safety net for those who want to stay heavily overcollateralized:
We could offer a vault-type with a quite high CR (let’s say 300%) but keep the LR a lot lower (for example 150%) so vault-owners would not be able to mint DAI so close to getting liquidated on the next (small) dip.
I guess a lot of the risks by liquidations can be mitigated (if LR is 2x the CR, we would need a 50% dip for the vaults going underwater), those vaults can benefit from a much lower stability as well.
I don’t know what that would imply smart contract wise, maybe this can be handled in the flipper, maybe a new JoinAdapter?