It would be interesting to entertain the idea that each CDP have a speedbump every so often. Could be a small amount every month, or a % of the debt every 6 months, or perhaps 1 a year.
The requirement would be that the CDP owner would need to burn a % of their debt by the end of the speedbump time period.
This would assure that CDP owners are not abandoning IUSD indefinitely, and would be prudent for them to keep their debt under control. It also drives demand for IUSD so everyone is not just shorting in waves. These monthly burns could be for all CDP’s at once or staggered, depending on when the CDP was opened so everyone is on their own schedule.
This could be a 50 iusd burn, every month for every 500 iusd debt. OR a % of the debt. An example of % of debt would be 10% every 6 months.
Is this only in times of a significant depeg? Would they be forced to pay their debt or could they simply add more collateral? CDP owners already pay interest, so they have an increased debt every month already to worry about. Adding forced payment intervals seems like it would just add a point of friction for CDP owners (and might have tax implications).
Its to pay off debt so people dont abandon their iusd position. This is thebreason for depeg. So i would imagine it would only be necessary to turn this on if there is a depeg.
Adding collateral doesnt help the peg it just gives people more margin power to mint and potentially sell more iusd.
This would be to help the peg and make sure cdp owners are not minting and selling indefintely with no plans on burning. This is the reason there is a depeg.
If the peg was fine then interest should be low and rmr would be low so no reason for a burn call
This prolonged depeg is due largely to the fact that v1 lacked many of the tools to help stabilize the price and the DAO’s approach until recently was to make smaller incremental changes vs aggressively pursuing the peg. Once the peg returns, I don’t think it will ever significantly depeg again for such a prolonged period. So I don’t think that forcing burning every month/6 months/1 year will be necessary. By the time something like this would be able to be built out and the forced burns would take effect, all iAssets will likely be repegged due to the parameters that we currently have at our disposal and are making adjustments to.
It shouldnt be a big feat. If theres a depeg. Cdps should get a debt call to cover. Either through burn or by taking collateral similar to a redemption.
The way it works now is redemption through rmr ratio and only people who have low rmr have to pay. Not everyone across all cdps who have debt.
This would be a more fair and collective effort for cdp users to help pay down debt in order to obtain a peg.
And this helps to avoid inviting cdp owners who sold iusd and never plan on buying iusd back again which is hard to make up for and is causing the depeg.
Feel like that’s so much work to be checking in.
A better user experience is to set it and forget it until you’ve finished what you needed the loan for and decide to close your position. Otherwise what are we doing? Just go back to TradFi.
If the concern is the peg, forget about it. Even if we get back to $1 iUSD, there will be no peg without a pegging force/mechanism in place.
IMO, the redemption mechanism is damaging to the protocol and incomplete in that it is literally nullified when we go parabolic, which is exactly when there’s the risk of depeg as people have more collateral value to mint more iUSD to dump.
When we experience the parabolic phase you should expect iUSD to drop considerably. that small periodic payments won’t be able to correct. You need large capital to absorb the load and volatility until ppl decide to take profits and buy back the iUSD.
i see your point, think this is just a more fair approach then the rmr increase. which is basically a margin call but only on people that dont have the cash to get their collateral up or the iasset readily available to burn.
so we are cornering a select group of our weaker users, instead of the cdps that are doing just as much of the damage to the peg, if not more, but dont need to come to terms with the peg because they happen to have a healthier collateral ratio and are far from being redeemed. so they can simply continue to mint and sell and leave the burden on the weaker users.
for these reasons, we are not in a set it and forget it environment. The rules keep changing on cdp owners and the peg is far from fixed.
think this would help the peg in a more fair way because its spreading the responsibility across all cdps owners in a small way only when there is a depeg. so each individual cdp owner will only need to burn/pay for a small % of their debt. this saves the protocol tvl and a lot of return users from getting burned and never recovering. this would actually reache every cdp user but only with a small impact.
Its clear the cdps with high collateral ratios are causing the depeg just as much as those who have a low collateral ratio if not more, but dont ever have to worry about rmr or the depeg.