Request to lower the collateralization ratio for GUNIV3DAIUSDC2-A

Request to lower the collateralization ratio for GUNIV3DAIUSDC2-A

The Protocol Engineering Core Unit would like to put forward the following community request to lower the Collateralization ratio for GUNIV3DAIUSDC2-A to 102%.

This is in alignment with the already proposed Parameter Changes Proposal - PPG-OMC-001 - 2022-01-07 that are requesting to:

  • Increase Maximum Debt Ceiling (line) by 490 MM from 10 MM to 500 MM
  • Decrease Stability Fee by 0.5% from 1.0% to 0.5%

Please voice any concerns or objections you may have to this proposal as GovAlpha will move this forward to an on-chain poll for MKR holders to vote on.

7 Likes

full ACK. we talked about this topic in the last MOMC meeting but since this parameter is not covered by this PPG, there was no mandate for a change.

thanks @Derek for taking action - this will bring the CR on the same level as the 0.05% pool so totally reasonable

3 Likes

Please correct me if I am wrong but if the DAI price moves off 1 to the low side here are we not setting up these GUNIV3DAIUSDC2-A users for even more losses should such an event ever happen?

Granted this is more unlikely with significant USDC in the PSM, but if Maker starts moving to reduce this PSM USDC exposure it could then increase the loss hazard on the above via lack of readily available PSM USDC liquidity to maintain the PEG.

1 Like

Just writing a short reply right now - to note that I need some time for a more detailed reply, but I don’t think these proposed changes are fully thought through from the user perspective. Sorry if that’s a wrong assumption. I’ll hopefully have a more detailed response by the end of Today.

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What is rationale behind 500 M ? Current TLV on uniswap V3 0.01% is 52M shouldn’t be debt ceiling set around this value? maybe little higher like 60 M just to rule out (kind of starve) other suppliers of 0.01% pool that are currently not doing it via Maker ?

If it comes to 105% to 102% I totally agree that it is safe.

If it comes to 1.0% to 0.5% I believe that 0.4% would be actually neutral and in parity with 105 to 102 % change

2 Likes

To inform the decision for this request please consider the following spreadsheet:

Break-Even Calculator G-UNI - 1bps - Google Sheets (you can duplicate it if you want to play around with the numbers)

It contains 4 sheets with 3 cases each for GUNI
case 1: base case → no increase in usage of the pool ±5k fees per day
case 2: 2x current average daily usage
case 3: 3x current average daily usage

sheet 1: assuming 50x multiple & 500m DC (proposed)
sheet 2: assuming 50x multiple & 200m DC
sheet 3: assuming 20x multiple & 500m DC
sheet 4: assuming 20x multiple & 200M DC

I’m not saying what the params should be, but I think it would be good to balance users return on investment with Maker’s potential income.

2 Likes