The Cardano Indigo protocol has been created to allow for the creation of synthetic assets, such as BTC, ETH, or USD. To keep the price of these synthetic assets stable, a stability pool has been created where leveraged traders can liquidate their positions in case the price deviates from the underlying asset’s price. Currently, 47.5% of all synthetic USD is in this stability pool (for example). Additionally, each Cardano epoch (every 5 days), stability pool participants receive INDY governance tokens and other benefits.
To prevent the Indigo stability pool from being solely used to generate these benefits and to give more usage to the protocol’s synthetic assets, I propose implementing a maximum liquidity deposit limit (for new depositors only, so as not to affect those who already have their liquidity in the pool). This would limit the amount of liquidity that participants can add to the pool and give more utility to all the synthetic assets such as using them for DEX, CEX, Lending, leverage, exchange, etc.
I propose three options for liquidity deposit limits:
40% limit: If the stability pool reaches 40% of its maximum capacity, no one can add more liquidity until the pool is partially emptied.
45% Limit: If the stability pool reaches 45% of its maximum capacity, no one can add more liquidity until the pool is partially emptied.
50% Limit: If the stability pool reaches 50% of its maximum capacity, no one can add more liquidity until the pool is partially emptied.
If the stability pool is below any of these three limits, any participant can add liquidity and receive all corresponding rewards (as if it were a competition).
Implementing a maximum liquidity deposit limit in the Indigo stability pool can help the usage of all synthetic assets in the protocol. I propose three options for a maximum liquidity deposit limit.
Note 1: if you have suggestions you can comment them, if you disagree you can propose new limits.
stability pool BTC- 79.67%
stability pool ETH- 75.66%
These percentages are the current (today’s) amount of assets held by the stability pool.
- 40% Limit
- 45% Limit
- 50% Limit
- No Limit