[Signal Request] Increase the LINK-A Debt Ceiling

The LINK-A Vault is currently 96.7% utilized. It’s quite safe with a 175% collateralization ratio requirement. LINK currently has a market cap of $4.9B. Raising the DC on the LINK-A vault may increase DAI generation as there seems to be demand for this vault.

Not sure how much longer we’ll be doing these DC signal requests but placing here in case it’s needed.

Should we increase the LINK-A Debt Ceiling?

  • Yes
  • No
  • Abstain

0 voters

How much should the LINK-A Debt Ceiling be increased to?

  • 5M DAI (current value)
  • 7.5M DAI
  • 10M DAI
  • 15M DAI
  • 20M DAI
  • Abstain

0 voters

Polls will run till Wednesday, October 28, 2020 4:00 PM. Please leave any thoughts or comments below!

7 Likes

Another potential option would be to add a LINK-B vault with a higher risk premium fee and lower collateralization ratio.

For example:

LINK-B
Debt Ceiling: 5 Million
CR: 150%
Risk Premium: 4%

2 Likes

That worked well for ETH.

I did a quick look at the top 24 aLINK holders (excluding yaLINK vault) to see what stablecoins they were borrowing. I haven’t looked at what other collaterals these owners may be providing, but this should give us a rough idea of what kind of demand we’re looking at for stablecoin borrows.

owner borrowing DAI borrowing USDC borrowing TUSD borrowing USDT
‘0xb1adceddb2941033a090dd166a462fe1c2029484’ 5349701.63370646 2864625.633819 6001154.528392 9205861.826972
‘0xe3786bf25e15013fdda09dbe881529d44b9ca239’ 0 1834348.1825 9354.35454832646 7620010.688351
‘0x17080b589cdcbd10ebeaa24cb0096f4bb29eb52b’ 0 0 1828998.05967133 0
‘0x43d74a0080094d4f188eb8896a968712a7ad0391’ 0 1069523.14456 0 1311270.507735
‘0x2de640a18fe3480aa802aca91f70177ada103391’ 0 624953.81934 1500705.25428904 0
‘0xc3b2fc58a3a54739e303b5e7c53bd6021d1d56dd’ 0 2002305.156389 0 0
‘0x255341c4d7fb717db6e5b230a0e8e20f741e425e’ 452175.985048604 0 0 0
‘0xe9a0b962be9d343cb1e5053ed3f3a7cb8d071899’ 0 1018923.464971 0 1239659.37132
‘0xf8523151211e6cfb2d285b9b92f2ee517722253b’ 0 800746.326344 800685.489342943 0
‘0x2cdeb7e7fada98d854eb54118aa8e51c346a3146’ 0 0 0 1509034.65396
‘0xa25a9b7c73158b3b34215925796ce6aa8100c13a’ 200397.516178919 0 0 0
‘0x5063e2474f6846d31480e1f4b7697ab98522d242’ 0 0 0 0
‘0x4209c9ea64fb4fa437eb950b3839a43c99d96c06’ 0 766459.218397 50069.9324966093 182116.263421
‘0xc55c7d2816c3a1bcd452493aa99ef11213b0cd3a’ 63768.7622970336 0 0 897814.321869
‘0x80b3153f39aeec1ef68adc038913698e103e6e1d’ 0 0 650168.888961144 0
‘0x73d38d824fb2a24d1d888da0e582a850cb34343b’ 0 0 0 310031.697368
‘0x1f0aeaee69468727ba258b0cf692e6bfecc2e286’ 0 364772.750796 0 364434.053069
‘0x9ed629bc305c5731d43de27cbbe8f77976893c2b’ 0 0 627246.583345229 0
‘0x46821532292560e52a082fe1276b1a9f3c0c8185’ 0.001954981220618 371072.096046 0 0
‘0xae653682dee958914a82c9628de794dcbbee3d04’ 0 1436183.391303 0 389950.565222
‘0x53f6310141b5c17fe914047447239883ac3432c5’ 0.000101017592193 623809.243724 0 5029.518792
‘0x8cf3c31a3f08b65e4be9bd6dd690649d6d0dd0ab’ 366701.46021105 0 0 402506.246959
‘0xdd07f7daa27b9c154a29d300c4188fab70638473’ 0 0 0 352669.733578
‘0x3047dc840c0bd6ee2518d86d27aece9915875571’ 216267.192580923 20743.713711 0 30112.317613

total: 55736363.55
We are in a great position to increase DC on LINK and have many of them refinance from Aave to us. LINK is the most liquid non-stablecoin ERC-20, so we have lots of room. I say let’s give it 15 or 20M more ceiling and see if they use it.

8 Likes

With regards to the Debt Ceiling for LINK - or any other coin for that matter- one of the most important considerations has been volume, how much is bought and sold in the space of 24 hours. That gives an indication of how much collateral we can sell off if necessary.
Not that this should prevent a debt ceiling increase for LINK as the volume is excellent. Personally I would give them another 20M, but I am kind of surprised how long it has taken LINK owners to discover Maker.

2 Likes

Thanks for making this poll @Jiecut. Just want to mention that risk premium and SF will need to be increased at some point as well if DC gets much higher from here. It is simply due to increased slippage at liquidations when having higher debt exposure. Luckily LINK has very high liquidity so there is still some buffer left before reacting.

This is interesting @lix . So Aave stablecoin rates are currently a 2-3% higher but you can also borrow 8% more due to higher LINK LTV limit at Aave. I am curious to see how many of them might migrate to Maker when DC is increased.

I am not sure about LINK-B at this stage, maybe it is better to wait and meet demand for LINK-A first? To me it seems that people need some time before they realize about Maker’s new product offerings.

6 Likes

We only need to continue to increase LINK-A DC, and other parameters remain unchanged. Now is not the time to modify SF, but a great opportunity to attract LINK users. When LINK users reach saturation, we can discuss modifying SF.

2 Likes

I wanted to flag that, while it’s easy to conceptualize adding additional Vault types (USDC-B, and ETH-B), we should still have a really good reason. Adding one of these Vault types is still about 60% of the work of a new Vault type. We typically don’t need new oracle infrastructure to handle it, but the smart contract team work is the same. This means that, if we add another Vault type, it’s coming at the cost of something else. Fairly certain this is a similar amount of work for UIs, databases, and keepers.

What’s more, we need to think about liquidations for these types. Keeper infrastructure is extremely expensive, and in order to keep keepers as efficient as possible, we should think carefully about what additional collateral types we add. This statement holds true for capital efficiency too. Each new collateral type carries certain baseline capital constraints.

This isn’t to say we shouldn’t do this without good reason, but I don’t want governance to think of all these other concerns as an externality. These choices impact Maker on many levels, and we would be best off to fit as much as we can into existing collateral types.

10 Likes

This signal is coming in because the debt ceiling is full. To me, that means the current strategy is working.

1 Like

Thank you for highlighting the various costs of adding a new Vault type (excluding a new oracle).

I hadn’t considered them fully before suggesting a LINK-B option.

2 Likes

Polls close in 18 hours.

1 Like

Governance Poll will be posted on Monday.

3 Likes

The governance poll to increase the LINK-A DC to 10M passed last week with 53k MKR in support.

Yes - 53,142.86 MKR
No - 0 MKR
Unique Voters - 25

The bundled executive was passed on Nov 8, 22:19 UTC, available for execution on Nov 11, 22:19 UTC.

4 Likes

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