At activation of DC-IAM for WBTC-A we set the initial
line to 350 MM. Shortly after, the demand for DAI-from-WBTC-A picked up speed significantly, it slowed down a bit during last week’s sell-off, but I think it makes sense to get prepared.
Currently we have ~250 MM DAI-from-WBTC-A. If we get back to the speed we had two weeks ago, we will hit the current
line in ~ 20 days. Since the governance process does take some time (2 weeks for the Signal, one week for the onchain poll, another week for the exec), it is about time to think about adjusting the
line for WBTC-A.
The recently published State of WBTC report shows WBTC liquidity is decent enough to justify an increase. However there are few concerns about
- long redemption cycles that can last many hours and
- more than 50% WBTC is deposited on lending platforms and is used for leverage. This implies that in rare distressed events WBTC could in theory trade with a discount, which would present a higher slippage for MakerDAO auctions.
Recent calculations on WBTC-A risk premium suggested WBTC maximum debt ceiling of 550m. However at those debt ceiling levels risk premiums tend to rise closer to 10%. On the positive side, WBTC auctions seem to be very efficient and have high keeper participation compared to other collateral auctions. Further, current collateral ratio distribution is also quite healthy compared to other assets.
DC-IAM allows us to go a lot higher on the
line since we are not setting a new DC directly. However, as we already sucked up ~10% of all WBTC we should probably not be as aggressive as we could do with ETH-A - I will not add a billion option therefor.
- more fees collected
- more DAI in circulation
- we can keep up with the demand on DAI-from-WBTC-A
- we needed to increase the SF for WBTC-A in the last Rates Changes due to a higher debt exposure. If the demand for DAI-from-WBTC-A is growing at the same rate as the last weeks, the SF will most probably need to get increased as well.
Please vote for all options you would support in an onchain poll
- 350 MM (no change)
- 500 MM (+ 150 MM)
- 750 MM (+ 400 MM)
The Poll will run until 2021-03-11T14:00:00Z; its outcome will either result in a on-chain-poll assuming the outcome of the poll deems it necessary or its intermediate results are going to be taken to another initiative - another signal, onchain-poll or urgency executive.