An even lower, non-zero fee (0.01%, for example) would allow the peg to be even tighter, afaict. Is there any disadvantage to doing this?
The issue I see is that the PSM tighten the peg with a stablecoin (USDC or TUSD) but not with USD. You might end up using the PSM on Maker to correct the price of USDC.
Not sure if it’s good (more fees), bad (more risk) or something else.
The lower we make the fee, the faster we reach the debt ceiling and the less income is generated for the protocol
I would recommend a fee of 1 bp instead of 10 bps. To maintain a peg of 1:1, we are encouraging conversion of like assets, which should have a fee as low as possible, in my opinion. We are looking to get the peg to 1.00, not to make fees here. Having DAI pegged 1:1 brings more value to Maker than revenue generated from the spread.
I agree, but it also seems sensible to start with 0.1%, see what happens, make some good feed, and then reduce the fee down 1week after.
I believe @hexonaut is also working on code that automatically decreases the fee over time? That would be good to reduce the amount of governance.
Yup I’ve finished it: https://github.com/BellwoodStudios/dss-psm/blob/master/src/lerp.sol
It can be used again if we want to go from 0.1% down to 0.01% gradually over the course of a week or something. Not saying we should necessarily do this, but it’s available as an option.
@hexonaut isn’t it the timestamp from block defined by miner and therefore not reliable?
Tho I don’t think that is a big issue. But I think other code check against the previous value from the previous call. Or use block number.
case : mine a block with timestamp near the enddate
Call a contract
Curve() up to 1.001
Call tick with normal block. Return to 1.01.
I abstained here as we can SF 0 the USDC vault and not be in any rush. Though PEG being out of bounds for longer is a concern.
Since we are doing this the best way is to lower it steadily. We have waited like 3-6 months on this whats a few more weeks.?
Yeah >1M DAI/month I don’t know why people are not happier here.
Block timestamps are secured by the protocol. For our purposes it’s safe to assume they roughly match the current time.
You are right, I just checked it is actually 15min max from previous block and can’t be less than the previous one.
I want to point out that the DAI/USDC exchange rate has been dropping the past few days to 0.45% premium. If the trajectory continues, USDC vaults may be able to unwind naturally.
@hexonaut has suggested in Maker’s chat that this drop might be caused by precisely this forum thread and the PSM launch.
Whatever is the cause, it’s doing us good.
I am also of this line of thought. It’s going down because the arbitrageurs see the community taking the issue seriously. What we need now is follow through!
Uniswap return 150m too
I was wondering if it was wrong using the PSM module to increase our profits due to the DEFI craze (demand) forcing “swings” between acceptable parameters?
Let’s say we put a fee at 0.1%, price will fall to 1.001… we accumulate in the PSM let’s say 400M USDC which was needed to take the price down, if demands fall that will rewind itself, that’s fine. If demands continue, we simply put the fee back to 1% again. Well, if the price goes up again we can simply place it in 0.1%, earning a lot of fees in the process.
I don’t see nothing wrong here, in the sense that we keep the peg within the 0.99 - 1.01 range, but using PSM in fact we guarantee that we’ll keep the swings within that range. We will profit in this process, and many keepers / traders as well. Yes, we’ll be accumulating more stable coins of course, but util having RWA, that’s our best weapon anyway.
For me it is bad if we have 1.01 steady, but if we facilitate those swings back to ~1.00 (up to the market and whoever buys at 1.01 when the price is guaranteed to go down), then I see nothing wrong with this.
I really would like to see an accelerate PSM launch, I only see benefits TBH. Price is going down, but there is no guarantee it will continue (tomorrow some new token farming appear and it will go back to 1.01 again, and for sure things will continue popping up in the DEFI space).
Note that I’m assuming that for it going between 0.1 - 1 and back it’ll take some time, earning much more fees in the process.
Agree with your comment @smaugho.
I think the problem will be fixed sooner than we expect, after the launch of the PSM.
We already have embarked about 15% of all existing USDC. If we double or triple this (400-800m USDC more) the market will start to lack USDC and this should fix the peg (at least the peg DAI:USDC, not necessarily DAI:USD) quite naturally.
Closed the polls. Winner is yes with 0.1% fees for
tout. Proceeding to an on-chain vote.
@hexonaut will answer all your questions about this topic, starting in 2 minutes!
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