We need to consider SF and Liquidations if we’re going to 101.
Might be good to set Base Rate to -4 if we’re gonna implement this no? Don’t want USDC vaults to abandon their collateral.
Most of the increase was recently so they should have 5 to 6 months to unwind if I’m not mistaken, also for that to happen they should mint the extra available debt. I hope this measure has impact before then.
If they leverage doesn’t that compound the interest rate?
If you have a 101% CR, you won’t be able to collect stability fees.
Stability fees and liquidations aren’t a problem with 101% (and I asked the question 3 times). USDC-A vault owner will likely abandon their collateral.
When 1 DAI = 1 USDC (when RWA kicks in) we will set liquidation on and if keepers bid at least 1 DAI for 1.01 USDC we will not lose anything. Obviously, the expected interest will be lost and no liquidation fees.
I’m all in for better solutions and I proposed myself better ways like QE. Everyone here had 3 months to convince others and solve this problem. No one succeed.
We pushed the USDC-A LR from 120% to 110% then did nothing. The peg wasn’t solved at all. We dreamed about yETH. Didn’t work.
We will still be able to discuss how to solve the problem next time in a better way.
Over the initial capital yes but they would unwind as per the last amount extracted right? Overall it’s the same rate, total SF over the initial deposit as maker man said yes it increases, so does your collateral
IMO it didn’t work because Maker cannot yet scale to meet the demand there. They had to turn it off because they could easily hit the debt ceiling and cause DAI to go way off peg and screw themselves.
Meanwhile Andre is making a competing stable coin from the ground up that can scale up. I still don’t understand how exactly and am skeptical it will work, but it will be interesting to see what he comes up with.
So one thing to note is that we are going to have a USDC-A CR governance poll vote on Monday. What’s the rush for not having 101% CR for 5 days?
Going to 101% CR is too big of a change to bypass a governance poll.
And what about the chance the 101% executive doesn’t pass. Wouldn’t you rather have a 105% CR on Monday?
So just to speak to how I’d handle this emergency signal + the previous signalling poll.
If this poll is meeting the requirements on Monday morning (UTC) we’ll prep for it to go into an executive on Monday. I’ll also edit the regularly scheduled poll such that it will only come in effect if the Monday executive fails to pass.
This way, if MKR Holders vote for this emergency proposal executive before next Friday it wont get overridden, if they don’t want this emergency proposal, then they can vote in the previously planned signal poll next week and the result will be included in the Friday executive.
So is the plan to relaunch yETH with the new stablecoin instead of maker vaults? Perhaps if this proposal goes through at 101% LR then it will fix the peg enough to make them reconsider Maker as the cheapest and most reliable source of credit. Either way, the yETH failure is really another painful lesson about what happens when we are too slow.
This proposal doesn’t solve the scaling solution. It is a temporary stop gap that might restore the peg for a short time while it increases systemic risk. There is billions in demand and the system cannot supply that much. Even if we temporarily restored the peg, yETH could easily attract enough capital to put us back in the same boat the next week.
I wouldn’t call yETH a failure at all - it is one of the largest CDPs out there. People that thought it would fix the peg are just underestimating the amount of demand for DAI.
I imagine whatever new system Yearn comes up with will live aside and compete with the existing market for a long while yet.
I think DAI, which contains a variety of stablecoins, even if there is a demand of one billion, the risk is controllable. There is nothing to fear. DAI’s asset diversity can make it more stable. Currently, volatile assets account for more than 90% of DAI, which is an unreasonable performance. The future of DAI is the balanced ratio of RWA + stable assets + volatile assets and diverse assets.
Currently, volatile assets account for more than 90% of the DAI quota. Observing the past historical data, I think this is the main reason that makes DAI become unstable. It is correct to increase the proportion of stable assets (including various stable coins).
This has reached the required quorum, lets leave it open until Monday though to give more people a chance to vote.
Isn’t the point of an emergency to do something now? If we’re just following traditional office hours in a crypto world we’re screwed.
So imo, there are like 4 reasons we shouldn’t do this sooner.
- First, the signal specifically calls for an executive on Monday, that’s what we have a mandate for if this holds its majority.
- Second, this isn’t the type of emergency that screws us in the next 24 hours.
- Third, the USDC-A raise tomorrow should blunt the impact until Monday.
- Fourth, and most importantly, the smart contracts team is made up of humans who need downtime. It isn’t fair to ask them to work weekends when it isn’t strictly necessary.
Didn’t realize the OP stated Monday. My bad.
I think you are convincing me Seb. When I look at this from RWA perspective it isn’t problem solved but opportunity found. Abandoning at 1.01 if you are confident 1.0 will be hit is another bet that can be made.no SF no fees straight 1DAI for 1.01 USDC - unwravel it all over time.
I am still back to how much does the protocol want to grow USDC on the books USDC-A DC. I personally don’t see a problem with ‘cash’ being 20-30% of the current portfolio at ~500M. I also am wondering if people are putting USDC into a vault at 1.01 isn’t the point here is that risk is zero from a pricing standpoint to take on the 1DAI for 1.01USDC short/long term short bet…
I think what happens is everyone dumps on USDC-A at LR 101 until the PEG drops to or just below 1.01 and how much liquidity (DC) it will take in that facility to do it and keep it there.
Also realize you are kind of bound then to make sure RWA comes on line to buy up that USDC - which I know they are ready to do.
So lets say I switch here and go for 101 what stablecoin ala USDC DC are people even thinking about when they say they want a 101 LR?
One other thing I wanted to add.
I DO NOT consider this an ‘emergency’. Nothing fails in the protocol up here. A high PEG hurts business. I don’t know enough about Maker business in total to make a call if 1.03 is an emergency but nothing breaks in the protocol itself. When I think about a possible emergency is a PEG that is 1.1 and climbing fast - no liqudity - then maybe yeah - a liquidity emergency…
Which in principle can be filled by a USDC 101LR vault as long as there is DC there. There is PEG control as long as there is DC. Without DC zero control. So if we were going to sit here and really think about it there should be no DC on such a facility. Take the bet - with as much USDC as the market wants to give. Then this protocol will have at its highest a 1.01 DAI price. Then consider lowering the LR to 100.5. If one has in effect an reasonably (controlled by something like this
one just accordions liquidity out as markets need it, and accordion it back in as system grows (particularly through RWA over time).
Have to ask if we are at 1.03 might we want to start with a LR of 102 or 102.5 and say 50-100M DC and see what happens vs. going straight to 101?!
Why use PAX and not CGT instead? It has more liquidity and is in a neutral jurisdiction (with a view to confiscation - as in 1934 - Executive Gold Act)
Few numbers attached from risk side so people have a bit of context. If goal is to make a price cap on DAI at $1.01 by using 101% LR and pushing debt ceiling on stablecoins as high to achieve $1.01 price goal, we might need to increase exposure to stablecoins to about 200m or probably even more, about half of portfolio exposure minimum. Here you can see how much DAI needs to be traded on DEX into USDC alone to reach $1.01. But that’s only DAI USDC pair so you need to perform calculation for USDT and TUSD pairs as well and assume some equilibrium on those AMM, plus include CEX pairs.
The most disturbing part is that Maker is essentially competing with all other stablecoins deposits on AMM such as Curve or Swerve. So if a large institutional whale deposits 100m USDT to Curve, Maker essentially needs to mint proportional amount of DAI in order make DAI stable.
And there is this vote happening on Curve, that will change A parameter from 2000 to 1000 and will probably move the DAI price higher, because currently it is kept artificially low.