[Signal Request] Adjust the Surplus Buffer (September 2021)

Overview

We currently have the Surplus Buffer set to 60 MM with a System Surplus of ~ 50 MM. While the current net inflow to the System Surplus is pretty low, we might end up in very quickly filling up the Buffer in case of a lot of Liquidations Penalties being collected during a big market drop.

If this happens, we will start flapping and with that burning some MKR - this happened during Wild Wednesday and imho it was quite sad we did not use this event to fill the Buffer properly.

Following up on the Informal Poll about Increasing the Surplus Buffer I would like to initiative the next step for changing the Surplus Buffer.

Increasing the Surplus Buffer

Pros:

  • no MKR burning until die System Surplus filled the Surplus Buffer
  • if the system goes underwater, fewer MKR will be flopped as the System Surplus can get a lot higher than right now

Cons:

  • no MKR burning until die System Surplus filled the Surplus Buffer
  • DAI in System Surplus is DAI taken out of circulation (not a big issue anymore, the supply side is elastic due to the PSM)

Please vote on ALL options you would support in an onchain-poll.

  • 60 MM (no change)
  • 70 MM (+10 MM)
  • 80 MM (+20 MM)
  • 100 MM (+40 MM)
  • Abstain

0 voters

I will not ask for lerping this up (will reconsider if there is huge push back in the comments), as I feel lerping to the new desired level kind of defeats the purpose (no accidental flaps on huge market drop)

Next Step

This Poll will run until 2021-09-17T12:00:00Z; its outcome will result in a on-chain-poll assuming the outcome of the poll deems it necessary.

3 Likes

I do not want to vote on this now.
According to Makerburn it will presently take 388 days to fill the buffer up to DAI 60 million - this really does not need a vote right now.

5 Likes

Personally I see this as Motivation–if its taking 388 days to burn MKR–then the community should motivate itself on how to earn more, and save some. And hearing about OpenSea grossing $230M++ in fees for the month of August–should motivate All of DeFi to shoot for the stars, IMO.

3 Likes

I think it’s very wise, in fact I’ve seen several people complaining about it.

It would be interesting if you do the burn, as it was already stipulated, the burning of MKR would certainly generate very positive news for MAKER, as I feel that those interested in buying MKR will be more than happy to know that the system continues to function normally and that now there will be less MKR to buy.

3 Likes

flaps during market pullback are not accidental. When they happen, they support the MKR price in a market downturn. As MKR falls, the protocol buys it back supporting the price.

The only risk I see is that we flap too much. That is, that the keeper market isn’t strong enough to support a large number of flaps.

I would also say that people should check reddit for the PR fallout from not burning. If we are going to take a pure growth approach, that should be articulated continuously to MKR holders as actions like this are breaking the MKR burn narrative.

Minimally, this is the reason for lerping to these targets, it is the compromise with MKR holders that want a burn and those that don’t.

9 Likes

Excellent point re:messaging about not burning. I think we should not burn or burn symbolic amounts but hadn’t thought that it could become a narrative own-goal. It should be relatively easy to talk of the virtues of investing in growth.

2 Likes

I think MakerDAO should burn a small amount and use the majority for innovative growth programs like MakerLabs. Use the non-burned MKR to auction MKR denominated bonds in an NFT. People could fractionalize it and own as much as they like of the bond. Use some MKR to provide liquidity on Uniswap or Yearn. Perhaps us some MKR to buy insurance coverage from Nexus Mutual.

1 Like

Polling for this signal is live here:
https://vote.makerdao.com/polling/QmXcVy9R?network=mainnet#vote-breakdown

Options were very close with few votes separating the over 50% threshold. Only 100m DAI option garnered more than 50% of non-abstaining votes. The Signal went through to the polling stage due to having an option pass this threshold and the high number of overall voters. Please express your support or opposition for this change before the poll ends on Thursday September 23rd.

2 Likes

Really disappointed that we seem to have decided to never burn again.

3 Likes

As an MKR Delegate, I have voted, “Yes” to a 100M DAI SB (I personally believe that we need to work more on both a Value + Growth proposition) – BUT I am open to hear you out folks if you think the Community should opt for a lower SB, like 80M DAI.

1 Like

Patience my friend - the time will come when MKR will be burnt again, and in much larger quantities :slight_smile:

For now, I believe it is best for the protocol to minimize risk of having to mint MKR, scale the community, and ensure long term sustainability of the protocol and ecosystem.

2 Likes

Looks like the on-chain result was a “no” vote so we might be burning soontm after all.

3 Likes

Well, the MKR holders have spoken. At least it’s a good price right now for burning :fire:

This signal failed to pass in its on-chain poll here. Thanks to all who took the time to vote on this issue.

2 Likes

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