[Signal Request]Increase Risk Premium for USDC as risk increased due to over collateralization

Hi All,

The current over representation of USDC should increase its risk factor.

Pro:
Increasing the Risk Premium will create an incentive to use other type of assert.
Probably TUSD or PAX

Cons:
Increase PAX or TUSD assert

  • 2% RP
  • 4% RP no change
  • 6% RP
  • 8% RP
  • Abstain

0 voters

Poll will end October 14 , 2020 (Toronto) .

1 Like

Please read over the Practical Guide if you haven’t already.

It’s missing an abstain option currently :slight_smile:

1 Like

I don’t see value increasing the premium further. More likely, most of the Vaults in USDC right now are abandoned. And new ones will be abandoned as well (6% or 4% will not change this fact). When the PEG is over 1.01 (which it is sometimes), with leverage anybody could get extra $$$, and the RP will not change that fact, USDC will be used anyway.

Greater RP will simply increase the probability to have uncollateralized DAI (therefore I vote in fact to reduce the RP). Would be great if a solution for this issue (which is a very important one!) is studied.

I recommend to check the proposal made by @monet-supply :

If something like that is placed in the system, then increasing the RP would make sense. Till then, it creates more risks IMHO (under-collateralized DAI)

most of the initial vault have been abandoned
but there is still trading happening on big volume you sell at 1.0101 you buy at 1.0098.
that the reason why the peg doesn’t go down.
by increasing the RP we won’t fix it but we will incentive trader to use different assert as the margin will be higher.

Greater RP will simply increase the probability to have uncollateralized DA

Not if the other stablecoins are at 4%, that won’t have any impact except increasing other stablecoin.

Basically the question here is : do we prefer
a : 400M usdc 40 tusd 40 pax
b : 200M usdc 140 tusd 140 pax

Edit : ok got your point, that won’t change the issue.
May be changing the TUSD and PAX to 100.9% tho

I think debt ceilings would probably be a better tool to achieve this. We could lower the debt ceiling on USDC to 300M, which would push those arbitraging the price around $1.01 to TUSD and PAX.

4 Likes

Actually you are totally alright.

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