The WBTC DAI minted has been effectively capped by the debt ceiling for a week. WBTC is the most popular collateral after ETH with 8.08% of DAI minted. There has been strong demand for minting DAI from WBTC, maybe even stronger demand than from ETH. This is important to help stabilize the peg, and add DAI liquidity in this 0% rate environment. WBTC is in a unique position being the only active Bitcoin collateral on MCD.
There has been some discussion in the community regarding raising the WBTC debt ceiling. Members discussing the risk profile of WBTC, and also an increased risk premium that should come with a Debt Ceiling increase to balance the increased risk exposure.
WBTC Collateral Discussion - It should be noted that WBTC has some custodial and counterparty risk.
Increasing the WBTC Debt Ceiling
Increasing the WBTC Debt Ceiling would allow more DAI to be minted from WBTC. MKR Holders will be exposed to more risk. Particularly WBTC custodial risk and WBTC liquidation risk.
- 10M - No Change
How to increase the WBTC Debt Ceiling
There has been discussion on how a WBTC Debt Ceiling increase should be implemented. We may want to keep WBTC Debt Ceiling room available for retail users. There are also some additional risks if the debt ceiling is being used by one vault.
The winning option will be included in the poll with the WBTC Debt Ceiling increase. And if the poll passes, the debt ceiling increases will be included in the weekly executives.
- All at Once
- 500k per week
- 1M per week
- 2M per week
- 5M per week
Increase the WBTC Risk Premium
There has been support for increasing the WBTC Risk Premium with a WBTC Debt Ceiling increase. Though, there may be some mixed opinions on how much to increase the WBTC Risk Premium.
- WBTC custodial Risk
- Comparison with ETH-A Risk Premium
- DAI liquidity
- Rate shocks
To keep it simple, you should assume a 0% ETH Risk Premium for this poll. If that changes before next week, that’d be added to this poll result.
If the Debt Ceiling Increase gets spliced up, the Risk Premium increase will also get spliced up.
Note: Stability Fee = Base Rate + Risk Premium
- 1% - No Change
- I think the risk team should decide
Polls will run until Sunday June 21 at 7pm UTC to be included with the weekly governance polls. Possibility for extension if there is not a clear answer by then.