[Signal Request] Adjusting Dust Parameter (2021-1)

I would imagine that 10k USD (DAI) is a small price to improve user UX.
But the approval process itself might be harder than the actual implementation.

Anyway, from my side I am more than happy to implement such rebate smart contract, that just give rebate to eth accounts that call bite of small vaults. this is very easy to verify on-chain, and can be done outside of the core protocol.
Knowing bite will be called, eliminates the attack vector @monet-supply mentioned (of whales splitting their vaults into many small sizes).
We are even willing that B.Protocol will seed it with 1k DAI (as this is our interest as well).

The implementation is something i can do over the weekend, and the risk for funds is very minimal.
But getting the community approval will take much more time than that… So if you or @ElProgreso want to take the lead on the community, I can commit on implementing it (if accepted by the community).

  • this is a proposed solution to Maker as a whole, does not benefit directly with B.Protocol in any way. Our interest here is that Maker (and thus also B.Protocol) will be able to offer small Vaults.
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Ok, even if a user thinks it is economically sound - it is not for us as MKR holders as we think liquidations could run pretty bad resulting in bad debt that we are going to cover - right?

Even if there is something that could fix that - that is all future talk and not a fix doable in short time.

If we have something that would allow lower dust again without hurting the system - I am all in for that. But with the mechanics we have right now there is no alternative to increasing the dust

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I guess that’s my point, that so often what we do is say well this works so let’s do it despite the downsides. @yaronvel is saying he could have a solution very soon for this that only costs the platform 9k DAI. I proposed several alternatives in my initial post to the forum and I’ve seen others talked about as well since then.

How big of an issue are these vaults under 500 DAI? If high gas prices + high ETH cost are the reasons we’re trying to change, it’s worth pointing out that splitting a large position across many small vaults would also be prohibitively expensive and only profitable if the vault(s) holder knew they would not be bitten because of their actions.

The risk of not being able to sell undercollateralized vaults is super important. But I would argue turning away users and making the protocol harder and harder to access is also an important risk to consider. When I first came to the forum I was told the dust minimums would be coming back down once we figured out liquidations and I really want to believe that is true. But it seems to me that we are walking down the path of catering to whales and institutions and that’s a dangerous path to take.

For a flourishing DAO we need a multiplicity of actors with different backgrounds and experiences. As we start to price out potential vault holders we drastically limit those that can participate in our platform. I think this is a problem that warrants some capital investment rather than leaning back on the cheap and easy solution.

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Which other cases are you referring to?

It is a question of resources and priorities I guess. Imho finding a solution to this is not very high in my personal list

There is a long way from a forum post to an actual implementation in the system. This signal is about now. No need not to think about future alternatives, but don’t stop mitigating risks now if it is fixable now.

We are turning away users if we don’t e.h. fix the peg. Accessibility of vaults is not priority A. DAI is the product not vaults. We haven’t seen any decrease in DAI printing since the last dust increase I guess?

That is a pretty harsh statement.

I am pretty sure everybody wants to have dust as low as possible. But I would rather have a higher barrier to entry the vault system then again suffer from badly running liquidation on the next big dip. Maybe liq2 brings new option?

That’s fair. The reason it’s high up on mine is because if we don’t find a solution who knows how high we will have to raise the dust limit. Working on something now to bring forward so we can get back to having a dust limit that’s accessible for average people globally.

I think we’ve been holding the peg pretty well since the first PSM went live and will continue to do so as we offer more PSMs. Vault users are our customers as well, and utilizing a vault is a great way to get involved with Maker Governance. There are a lot of stablecoins in existance if all you want is exposure to USD on-chain. The collateralization of crypto assets is part of our value proposition to the public, just like maintaining the peg is. For Maker to succeed, IMO, we have to be focused on both.

Lastly, I don’t think my comment that it feels like we are walking down the path of catering to whales and institutions is harsh. Not to unnecessarily inject politics here, but it’s worth noting that the US government finally issued a second general stimulus to its tax paying citizens for COVID relief. After nearly 6 months of waiting, these people received the equivalent of 600 DAI. Both inside the US and outside of it 600 DAI is a lot of money to many individuals. If we forget that, we will no longer be able to serve average people and all that is left are big players that already have countless options for collaterilizing assets. Cutting out small vault holders is a huge risk to the longevity of our platform.

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At least in the last discussion on increasing the dust parameter, I remember one for the arguments in favor was an assumption that liquidation 2.0 will be able to support smaller dust parameters.

I have some concerns about that, which I expressed here, and I think the community should get clarifications from the smart contract team on that.

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Gas prices today are crazy high.

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few hours ago they were more than 10x lower.

Seems that circa 40-50 gwei is price floor currently. It can go lower, but not for long.

I just wanted to remind people that we need a majority for a specific change in order for this to move on-chain. If you’re currently only voting for an option with less support, consider compromising and voting for a second or third choice.

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Words from the Wise:

  • “If you aren’t embarrassed by your product, then you launched too late” --Reid Hoffman

  • The best products make people say, “Where have you been all of my life?”

  • Because of this, early customers are willing to tolerate a half-finished product (or something future you will be embarrassed about) because you’re the only person showing up with something they’re desperate for

  • non-consensus insights are critical

  • It’s time to pursue an idea when:

    • No one can talk you out of doing it
    • The pain of regret from not trying > any possible pain experienced from failing

Vote wisely.

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Although I worry having such large minimums really does start to exclude more people (as many have pointed out), I can fully see the reasons behind it. From a first time user point of view though, we will start to face another challenge which is not only that it requires a high amount of collateral to start with, but a high amount of collateral to check and make sure this is legit. The old adage of try a small amount first is being eroded here, and where $4,000+ of collateral is small enough for people to test with is an even smaller group of people. In the original CDP Portal for SCD, we use to see quite a few vaults starting with around 0.1ETH generating like 10 Dai, and then verifying it was all ok and depositing much more. This is no longer possible.

However, I am going to vote for 2,000/2,500 Dai for the minimum because although I think we can handle the 1,000 or 1,500 right now, having to raise it every few months leads to more frustration by users who end up with warnings about their vault being below the minimum etc. So I think we should aim for a Value which should be able to last as long as possible.

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Excluding abstain, the ‘2000 DAI’ option ends up with 23 / 43 votes (53%). This will move on-chain on Monday 18th January.

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Not only frustration, also a bit of a surprise when they don’t follow the incurred changes to the protocol. But, this is where customer service quicks in. Hopefully we will step up and produce such.

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Actually on Oasis.app (including Borrow) we already have customer support (https://oasis.app/contact), with a couple of people watching over this in a few different languages. And, although not so much this year, but up until the holidays we did get quite a few questions about what to do when it increased. 20 Dai to 100 Dai wasn’t so bad, a few people wondered what to do, but 100 to 500 caused a lot of confusion, and much more difficulty either paying back the vault, or drawing more Dai to the 500 minimum.

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Kind of like a Bait-and Switch tactic :laughing:

Just kidding man. Glad that Y’all will be there to hold people’s hand. Good stuff.

What is really anoying is that users cannot even increase their collateral without first increasing their debt (or closing it).

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The on chain poll and executive vote for this signal request have passed successfully, and the dust limit has been increased to 2,000 DAI for all vault types.

Thanks to everyone who participated!

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I started a vault long ago with a dust requirement of 20 dai. I did to pay my curiosity about this protocol and frankly speaking in no place I was informed with strong remarks that one day the community would have decided at my expense to ransom my 0.33 eth until I pay 2000 dai on the vault. Yes, sorry if it sounds harsh and no mean to offend anyone, but this is strongly wrong. There is a simple principle violated here, changing the rules with old stakes shouldn’t happen. I think different solutions were possible but I didn’t investigate the technical design, I’ve just bought the narrative.

Definitely sympathize with the changing parameters, that’s ultimately what brought me to the Forums in November when the Debt Floor was raised then.

One thing to note though, you can still access your funds paying off the total of your debt. If you don’t have the funds to cover the DAI debt, you can look into implementing a flash-loan where you utilize your collateral to pay off your DAI debt. You do not have to borrow more to unwind your position, but if you wish to generate more DAI you must do so in excess of a 2,000 DAI total debt.

Hope that helps, if you have any questions feel free to respond here or PM me.

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Hi prose11, thanks for your reply, how exactly can I “implement a flash-loan where you utilize your collateral to pay off your DAI debt” ?