[Signal Request] Increasing the 'dust' amount

[Jiecut]

The ‘dust’ parameter is the minimum possible debt of a Vault. It is currently set to 20 DAI for all collateral types. This issue was brought up in the rocketchat by @cmooney.

Recently the price of gas on Ethereum has been going up. It’s no longer cost effective to liquidate dusty vaults due to the gas costs of the auction process. We also need to consider that gas costs could increase sharply during a liquidation event. There’s also the gas cost of cycling capital, and which can also be quite high compared to the profitability of a dust vault liquidation.

Another thing to note, is that opening a vault costs a lot of gas anyways. It’s not cost effective for users to make small vaults as well. (It can cost more than 550k gas to open a vault. That’s $9 at 50 gwei.)

Considering these gas costs of these actions, the dust amount should probably be raised to 100 DAI or higher to ensure ‘dust’ vaults are cost effective to liquidate.

Auction costs: Used $320 Ethereum

	Gas Used	Gwei: 100	150	200	250
Kick	257k	$8.22	$12.34	$16.45	$20.56
Tend	100k	$3.20	$4.80	$6.40	$8.00
Dent	86k	$2.75	$4.13	$5.50	$6.88
Deal	52k	$1.66	$2.50	$3.33	$4.16

Increasing the ‘dust’ amount

• 20 DAI
• 50 DAI
• 100 DAI
• 150 DAI
• 200 DAI
• 250 DAI
• Abstain

Polls will run for ~1 week from July 29 to Aug 5. Please leave any thoughts, comments, or analysis below!

@monet-supply @MakerMan

[Jtathmann]

I’m leaning towards $50 for now. I dislike what the user experience is for new DeFi users, and $100 just feels too much (acknowledging the risk)

[bit]

We can assume that L1 costs will soon be so high that only transfers and very optimized contracts would be worth running on L1 unless transferring more than $5k. Sure, we should optimize but unless MakerDAO has its own L2 solution - it will be hard to compete with other projects/stablecoins.

[ultraschuppi]

Given the current gas costs I doubt it is a good idea to open a CDP for 50dai

[Jiecut]

For some figures on the gas cost of opening a vault. It costs more than 550k in gas. That’s $9 at 50 gwei.

[monet-supply]

Wow that’s a 0.9% effective origination fee on 1000 DAI loan. I’d prefer to up the dust limit to 1000 DAI considering the gas costs - we can almost consider it a usability issue like slippage warnings on DEX. Opening a small vault is just not economical at this point.

[Jiecut]

Polls close in 1 day.

[LongForWisdom]

Just a friendly reminder that poll wording should be submitted on the community github here https://github.com/makerdao/community/tree/master/governance/polls by end of day. Please tag me as a reviewer on the PR.

[Jiecut]

The poll has ended. The community has signalled support for increasing the Dust Parameter from 20 DAI to 100 DAI for all vaults.

PR for an on-chain governance poll - https://github.com/makerdao/community/pull/710

[Jtathmann]

Breaks my heart that the barrier to participation is at least $100

[Jiecut]

This was placed as a governance poll on 10/08/2020 to express support or opposition to increasing the Dust Parameter from 20 DAI to 100 DAI for all vault types.

“Yes” won with 54.54% of the vote. Winning by 3,404.51 MKR.

Yes - 20,468.45 MKR (54.54%)
No - 17,063.94 MKR (45.46%)

It’s been included in the next Executive Vote. https://vote.makerdao.com/executive-proposal/modify-multiple-system-parameters

[Jiecut]

The executive has passed and the spell has been executed. The dust amount for all vaults has increased from 20 DAI to 100 DAI.

Thanks to @cmooney for bringing this issue up in rocketchat and everyone who made this possible. The governance poll was close. Though, some might say even 100 DAI may still be too low. Will be interesting if someone else makes a signal request with analysis to increase it further.

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