- ETH-B Risk Premium at this level of unutilized debt ceiling is likely higher due to OSM risks. The goal of proposed reduction of ETH-B SF is to attract more demand and increase debt ceiling utilization.
ETH-B Vault type has been live for about a week but we haven’t seen much of DAI minting (current DAI debt from ETH-B is at 263.000 DAI). The reason behind originally proposed 20m Debt Ceiling and 6% Stability Fee on ETH-B was to meet potentially large demand coming from current ETH-A Vault users who are involved in liquidity mining. Due to lower collateralization requirements on ETH-B they would be able to boost their yields by performing migration and Maker would have been able to earn additional fees.
It may be too early to tell whether the low usage is related to the fact that this vault type is in existence only for about a week. But since liquidity mining yields fell heavily in the past few weeks, the current 4% rate difference between ETH-B and ETH-A possibly doesn’t provide enough incentive for users to perform migration to ETH-B. Furthermore, the difference between Compound stablecoin borrow rate on ETH and ETH-B at current level is more than 5%.
We are proposing a decrease of ETH-B SF to 4% from current 6% in order to attract more demand. There is also pending Signal vote for changes going forward regarding stable coin fees.