Propose to increase the maintenance ratio to 500% for IUSD CDPs only.
This lowers the amount of mint that any CDP can create. It would slow minting without increasing rmr and is just as temporary as an increase in RMR would be.
This supports the peg becuase there is less minting and selling of iusd and MR reaches across all CDPs. It spreads the peg responsibility actoss all users and wouldnt mostly effect lower ratio cdps like increasing RMR does.
This takes the best features of increasing the RMR without burning users and redeeming their collateral at their weakest moment.
And once the peg is reached and is stable then we can always lower Maintenance Ratio again.
There is really no point to having Maintenance Ratio below RMR durring a depeg anyway.
Finally a good idea to reduce the amount “new” of long leverage when ADA is weakest, instead of absolutely destroying other users by shifting the goal posts during their weakest time. This has always been my problem with the “we must maintain the peg” maxis. They only come out of the wood work when ADA is crashing against USD, and this is the most painful and arguably unfair time, to target CDPs.
Saying you can’t mint new iUSD at least says, no more betting, and doesn’t hurt any existing user of the platform. This solution adds way more trust that if I engage with Indy I won’t get screwed in ways that aren’t purely related to the price.
that is the most optimal solution at this stage i believe, it can also be automated in the future (i.e. make this ratio dynamic depending on depeg gap). Let’s make it to the vote
I feel that increasing MR might freeze the situation for a while… I am fine, I have time and I am not obsess with depeg… moreover, I would like to share few thoughts which may apply to the different recent proposals:
CDPs are the blood of the protocol, less CDP (amount & value) means less revenues for the protocol and Indy holder, and protocol need some minimal revenue to survive over time
Although Depeg is the result of an unbalance between Dexes sellers and buyers, it may be the result of multiple causes,
2-A) one recurring may be the very tight liquidity in the ecosystem (look at how long price remains unchanged for iETH and iBTC on Minswap when ETH and BTC prices vary quickly and you will realise that depeg is mainly related to a very tight liquidity for those assets) and
2-B) another one may be leveraged trading (with CDP) in a specific direction…. In the second one, by the way, I think it is aggravated by the first one…
What to do with Depeg ? To be clear, I am not a pegmaxi and I think that,
3-A) as long as iAsset liquidity is tight on dexes, small steps upward in RMR, interests have good chance to fail
3-B) any tentative to reduce it in a period of ADA downtrend will result in a decrease of viability for protocol (more or less fast and brutally depending on steps we make on RMR and interest)
3-C) I would rather accept depeg for some time trying to expand protocol user base at a point that liquidity will increase on dexes, this will happen only with ADA significantly going up from where we are… and then increase RMR and interest may help…
finally, changing parameters too often is not giving a good signal
4-A) to anyone would like to join and may be a barrier to protocol expension
4-B) to people already in
It reflects, on my view, a lack of maturity from the community to drive the protocol with a tendency to jump into reaction … e.g. redemption fee structure changed recently in one direction and then in the opposite in less than one month time!
I am happy to be challenged and convinced by other approaches, it is the purpose of such post, but please bring argument & facts as much as possible over believes…. I do not have any personal agenda, I am CDP and Indy holder, and would like to find the best for our protocol…
Somebody made the claim that raising RMR would only hurt the smaller CDP holders because whales can afford to increase their collateral ratio well out redemption range. Wouldn’t whales do the same thing here? While the rest of us cant afford to mint. Im not saying it wouldn’t work to slow excessive minting but it may still disproportionately favor whales.
I guess all pegmaxi are now super happy as iUSD has repegged within +/-5%
Thanks to the death of Yen carry trade and US recession fears
As a result, no need anymore to pile changes in protocol parameters
ABSOLUTELY NOT!
Even at 185%, the recent downturn has caused cascading redemptions leading the destruction of iUSD liquidity referencing DexHunter’s Pool liquidity dropping from 15M pooled ADA to 8.44M ADA.
THAT IS ALMOST HALF GONE! The 24hr trading volume is 6.4M ADA, that is not healthy.
The peg can not be reliable/stable if we keep draining the pool and forcing people out of their CDPs.
People are not going to open new CDPs if we keep putting all the financial burden on them.
This is what I’ve tried to warn against and now we are primed for an overcorrection to push everybody out of this app.
We should be reducing burdens in this crisis and protecting users!
For CDPs from 5Mi to 10mi iUSD, it would mean 25Mi to 50Mi collateral, I am not sure that even whales would put such high level of ADA collateral in a single protocol…
Agreed, I was a bit ironical… but at least, overall market liquidity tightening has given a good example of what could happen with excessive RMR I.e. iUSD liquidity and protocol user base tightening…
Conceptually, iUSD is born from debt, so it is fragile in weak market conditions… it is only once its liquidity on dexes will be huge relatively to market movement that peg will remain stable… and I think it has never reached such point historically, so that I think we should rather focused on expanding TVL and CDP amount rather than on fixing peg…
I think you are confusing RMR and Maintenance Ratio… the proposal actually is agains higher RMR (what you thought it is). RMR should stay 185%. Maintenance ratio defines how much you can mint. Higher maintenance ratio decreases the amount of iAsset you can mint, so this way we limit supply but not rekting CDPers.
I get the need to solve the depeg problem, but i think this proposal will only accelerate the number people leaving this protocol. The only people that would vote for this are one’s who have little skin in the CDP game and have large amounts of Indy. This proposal will only result in driving people out of CDPs and SPs and reinforcing the growing view that there is a disconnect between those who use the protocol and those that govern it.
PS - I don’t think “minting” per se is the problem. Some people mint to “dump” and others mint to stake in SPs. By increasing the RMR you might solve the iUSD shorting problem, but you have also decreased the iUSD that is staked in SPs.
This does overcollateralise the system and would slow minting and selling wirhout an increase of redemptions. Only would be temporary until the peg is sustained. Similar to increasing rmr but much less severe in terms of decrasing tvl that rmr creates.
This would lower the amount that cdps can mint. Its much less agressive than increasing rmr. Increasing rmr will redeem cdps, that decreases tvl for the protocol.
Increasing mr affects all cdps. Its clear the cdps that are causing a depeg are the big cdps that mint and sell and then have no problem voting for an increase rmr because they never have to worry without about a depeg they caused and can redeem weaker players forna quick gain.
The important thing is this is only temporary like all the other proposals say.
It would basically stop the cdps in their tracks, and put them in a position so they are not minting and selling which is the true cause of the depeg. The only play would be to pay off their debt and that would fix the peg.
Unlike increasing rmr. Rmr increases only hurts lower colateralised cdps. Which obviously doesnt fix the peg for more than 48 hours, if at all.
Unfortunately, there are no solutions that wouldnt hurt tvl and users because in order to fix the peg we need to tighten the rope for all cdps especisally the big ones, which an increase in rmr doesnt do.
If you plan on saving people from minting so they can put it into a sp or lp then you need to separate those who mint and sell from those who mint and stake. It would have to be a voluntary halt on mints for each cdp owner to stabilize their interest, rmr and mr and avoid the dao changes in return for voltunatarily halting their mint ability.
Not a big fan of closing minting iAssets as then newcomers can’t use the protocol and thus will leave to others protocols. On the paper it seems to make sense to close minting iUSD, stoping the selling pressure temporary but let admit we go for it, what’s going to happen when ada will spike ? and then people will start to accumulate iUSD instead of ada. As we can’t mint anymore iUSD, it will depeg but in other way than today until we reopen minting iassets with new proposal.
If we use RMR we can still mint iUSD and let the newcomers open CDPs, TVL goes higher. We also have arbitrage opportunity even for CDP owners to buyback INDY at discount and redeem at 1:1.
I will not vote in favor of this proposal as it makes no sense to me to close minting iAssets and not to use RMR to repeg.
I like your points Dingo and will also say that it’s borderline criminal that CDP users get ZERO vote in the governance of the protocol. We now have interest payments on CDPs and that is basically taxation. Like they say in the USA, no taxation without representation. Yes, INDY owners should have way more weighting in the votes in a pure value basis, but CDP owners should get some kind of vote weighted based on the amount of their CDP locked collateral + interest.
Rmr does the same thing except its worse. It directly lowers tvl and redeems users so they wont be returning if they get redeemed so much that they dont have the collateral to continue to invest.
Indy user lose trust when we increase rmr.
And like an increase of rmr its only temporary until a peg is reached. Its literally the same argument as rmr except users dont lose ada.
Its terrible to think we want to continue to increase rmr and reedem users butnwont actually fix the problem, that is large cdps contiue to mint and sell iusd and then vote to increase rmr right after causing the depeg.
An increase in mr wouldnt stop minting it would slow it down…
We cant sit here and say we want to increase rmr but not mr. Its so backwards and we just saw the last couple of weeks the largest redemption in indy history. The peg wasnt fixed for more than a couple hours and were right back to the depeg because people continue to mint and sell. Minting and selling is the issue but to say you would vote for an increase in rmr but not mr is bad logic INDY MAN
We’ve never increase RMR more than 185% it is an assumption to think we loose users trust although knowing it would help repeg.
Also i’ve never said i’m against raising the MR. I think it’s a balance to found but you can’t just choose MR over RMR as RMR IS the hard peg mechanism we can use to ensure fast repeg. Both should be discussed. We need to raise both MR and RMR not just one but closing minting no, I’m still not in favour of closing minting. We can start with 300% MR and 300% RMR it would make more sense.
Right its a balance, this discussion has no one saying we should stop minting. Its about increasing mr.
Increasing rmr to 300 would effectively increase mr to 300. Noone would mint past rmr if theres a depeg. They would get automatically redeemed for a loss.
