Target Below Dollar PEG

Due to the extreme demand for Dai due to Compound, coupled with a backdrop of global macroeconomic risk factors including the Covid-19 pandemic, at a time when global central banks have blown “The Everything Bubble”, and a strong correlation of crypto assets with equity markets (Dai demand will increase if equity/crypto prices decrease), I believe we should set the intention of utilizing our tools to target Dai below the 1 dollar PEG, perhaps 0.99, to allow greater ability to mitigate risks in an increasingly uncertain economic environment. This is not a long term recommendation, just for an interim period until risks have been abated. This should be accomplished by pulling all levers immediately to increase Dai supply. This includes:

  1. Increasing Debt Ceiling for assets that are currently at their Debt Ceiling. This includes USDC-A and WBTC.
  2. Increase Debt Ceiling for assets nearly at their Debt Ceiling. This includes ETH-A.
  3. Lower Liquidation Ratio for stable assets. This includes USDC-A, USDC-B, and TUSD. Recommend lowering from 120% to 105%.
  4. Lower Stability Fees for all assets to 0%.

Once we get Dai below the dollar PEG, we can tighten parameters as necessary. I think we are not taking the current risks of a strong Dai seriously enough and the risk of an emergency shutdown is increasing.

4 Likes