Road to the PSM

This is great. Thanks, Sam.

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That i call taking a bullet for everyone, thanks a lot Sam !

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The PEG was restored at 1:1 for first time since months!!! I’ve seen unwind already huge vaults, hope more continue and we “make real” all those fees collected before!

Maybe we don’t need to use the PSM right now, but who knows. Great that we have it ready in case this reverts. Hope that those Vault owners be checking the price today, that’ll be a huge win situation for those owners, and for MakerDAO.

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I think the peg has nothing to do with what we did. The borrowing rate on Compound is +21% and BTC is at $33,200 (up 14% from yesterday’s ATH). Certainly not an ordinary day in DeFi.

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You are correct. The big swing was due to a whale moving 160m dai to usdc for COMP farming.

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I don’t think it is a total hazard if someone moved 160M just above 1.01 half-day, may be few hours before the psm start to hit the market.
Moving asserts in compound is also a way to hedge a position.

well done Sam for getting the peg back!

Also, with the peg fixed the benefits of using PSM just further increase, because it means the PSM can be used as a proper revenue generating product that market makes stablecoins and earns the lowest spread in the market.

Someone might want to double check these numbers, but if we set the spread at 0.003% (tin and tout at 0.0015% each) the PSM will have by far the lowest spread in the market and should easily be able to attract something like 50 million dai volume per day, which would then yield about 2.5 million dai in revenue per year

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Well I wish I could take credit for this, it is likely the Compound whale was just refinancing from farming with DAI to farming with USDC. This would not have been driven by the PSM. That being said, I still think the PSM is responsible for maintaining the current levels of USDC-A short positions.

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Ha ha, at the end of the day only Wally knows it.
But I think it is fair to give you some credit for that.

next milestone! first MM from PSM :slight_smile:

sry… update: already >2 MM

and another update: 35k left until DC reached

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@hexonaut I think it is worth looking at the three transactions that quickly filled the PSM-USDC Vault.

The two transactions are done by the same bot, and are similar

https://ethtx.info/0xe04bd5198c5aca2becc539ce5858d7fbeeaebfb206fde0ed468828b08587af44 is a 2M flashloan from dYdX that borrows DAI, swaps on Curve to USDC, puts UDSC into PSM, draws DAI and pays back the flashloan. Profit - 0.3 ETH, 1,05 M DAI minted

Similarly https://ethtx.info/0xa829c20e33d77bafee1c75935b7acfb8f0e90c9de31b2567ac9069db248c71ad - 2M flashloan drom dYdX, same mechanism, 1,05 M DAI minted

The third, https://ethtx.info/0xd913c963f0052854ed89f651614ef707e910f02f46dc28ca44ec3ac697b7065a is slightly different as the order is reversed. It also uses dYdX flashloan, but of 850,000 USDC. It puts this USDC to DAI, swaps DAI to USDC on Curve and pays back the loan. 0,850 M DAI minted

PSA: PSM gets another 27MM tomorrow :rocket:

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They seem pretty normal IMO, this should be expected, arbitrage bots are ready at this very moment to use those next 30M being added to the PSM, as far as there is a price > 1.0010 anywhere, they’ll use that gradient to get profit.

dYdX flashloans are “free”, therefore it’ll be the preferable Flash Loan Provider.

The true is that PSM will not make any impact in the PEG at least that is in the >100M range. And bots will use opportunities as far as GAS price is smaller than what they earn.

1- Profit : 0.318 ETH minus Tx cost: 0.2780141702413531 ~ 30 dollars
2 - Profit : ???
3 - Profit : 130 dai - Tx cost: 0.104262785 … ~ 30 dollars

Am I correct?
Doesn’t seem excessive to me.

Edit : following sam post I edit 3- profit from 20 dollars to 30 dollars

As @smaugho and @alexis said, yes this is expected operation. Taking a loan of DAI or USDC doesn’t really matter. The important part is the trade on Curve which always goes from DAI -> USDC which is what we want.

I do not know who executed the first and second trades, but it was me who filled most of the remaining amount in the third tx. Most of those profits went to the surplus buffer which is what we want. I made only $30 on my trade of 850k. The surplus buffer would have gotten around $1.5k or so.

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Did you? Edit my post so.
You did a great deal!
Can we ask for extra feature with the remaining cents? :slight_smile:

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Quantstamp Final Report: https://github.com/BellwoodStudios/dss-psm/blob/master/MakerDAO%20Dai%20Peg%20Stability%20Module%20-%20Final%20Report.pdf

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Now that we have the final Quantstamp report, we can move to the final phase and begin raising the DC towards the previously approved 500M mark. In the interest of balancing risk with the previous governance target of 500M DC, the DAO autonomous group has agreed that we will slowly raise the DC with the lerp module over several weeks.

For the next community executive I will be setting the PSM DC to 80M along with a lerp module which raises the DC by 35M / week over the next 12 weeks. The date for the monthly community executive is TBD, but I’m expecting either end of January or beginning of February. In either case this gives us 2+ weeks of PSM testing at the 30M level. The stablecoin vaults will be set to 0 DC at a later date which is TBD by risk.

The PSM UI is also being worked on and should hopefully be ready by end of week.

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I want to just clarify this slightly. That group doesn’t have the power to decide things of this nature. However, Sam and I did discuss it in that meeting, and no one present had any objections to that process.

On balance I feel that the course of action Sam is describing is a good compromise and I’m willing to include it in the next community executive as Sam describes.

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Yes, so to clarify, I went over this with @LongForWisdom and @Primoz in that meeting to confirm this as a reasonable course of action. This is not the Autonomous group itself deciding anything, but more us figuring out the best way to fulfill the previous governance mandate of reaching 500M.

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