Parameter changes for iUSD CDP's

Hello fellow Indigo holders and developers, this will be my first attempt at pushing through a proposal. The following are iUSD parameters I want to propose a change to. (I want to tweak the parameters of all 3 iassets but I think I can only do 1 at a time, is that right?). So for now, this is for iUSD.

  1. Debt Minting Fee from 0.5%- change to zero, get rid of it

Next, which there is no field to input such a change in the current create proposal section on the Indigo dapp website…

  1. CDP interest rate goes from 100% to the treasury, and changes to 50% to treasury and 50% to INDY stakers which is paid when a user pays off the interest(which is when they close the cdp I believe)

Explanation:

In my eyes, the minting fee is a bad look for newcomers wanting to borrow. I’m a user and I myself feel more incentivized to borrow on other protocols because of this little annoyance, and doing away with it would greatly increase my interest to mint more. It just allows more flexibility to be indecisive in a fast moving market. Furthermore, It is more enjoyable to use a protocol that doesn’t even use the word fee, people hate that. However, as far as fees on Indigo, this is the only one on the protocol I’m highly concerned about. Its not worth it for INDY stakers to potentially lose borrowers for just this small little fee that doesn’t provide much rewards anyway. More borrowers is better for the life of the protocol and we dont want to lose that to something so insignificant as this. Additionally, Its just nice to be able to increase the health of your loan by paying down your debt 1 day when youre worried of a market downturn, only to change your mind the next day if you regain a bullish outlook. Let’s say you repaid 1000 iusd to be able to sleep better at night, only to want to re-mint that same 1000 the next morning. You should not have to pay another minting fee to get back the same iusd you had the night before and be penalized just for being cautious the night before. After all, some of the worst dips that Ive ever experienced in crypto happened while I was sleeping. So you should be able to protect your cdp, and then re-mint the as much as you paid back without penalty. In closing on this, I want to really hit hard the fact that it’s for these reasons it is less attractive to open cdp’s to begin with, for some people anyway. And we want more users obviously in the long run, and I strongly believe this will help accomplish that. In the long term, for stakers and the treasury, more users with no .5% fee is far better than way less users with it. IF, INDY holders get supplemented from another source, which leads to my final parameter change.

Lastly, the splitting interest earned from cdp’s. Holders of INDY would feel more content holding their tokens of course if they were reaping much more rewards. Splitting the interest the protocol earns from cdp’s would accomplish this, as well as, more than make up for the rewards stakers would lose from abolishing the minting fee. Additionally I feel potential investors hearing about that change, would become increasingly bullish on the INDY token. To earn these rewards, you must be staked at the time a user pays off his interest, which incentivizes INDY holders to keep their tokens staked, in turn, reducing sell pressure. In closing on this, I understand the cut in half to the treasury is quite significant. However, it aligns very nicely with my other proposed change, to cut out the minting fee. If in fact my theory rings true, and abolishing the minting fee incentivizes more users to open cdp’s as well as current cdp owner’s deciding to mint even more since there is no fee, the treasury would make up a lot of the money that would otherwise be cut from this interest split. It’s of course tough to predict what the difference would be, but gaining more cdp users would most certainly make up for at least a decent percentage of the 50% that the treasury would now be splitting with stakers. The changes here work in tandem with one another.

Of course this is all my opinion. Thank you so much for reading and I look forward to hearing all feedback. Lets get this through to a proposal soon and we can vote on it.

Cheers,

D₳ppT₳rd
@dapptard on twitter and discord

4 Likes

Thanks for proposing, potentially interesting discussion … After thinking twice about it, I would say yes yes yes!

Distributing the ADA earned from interest to Indy holders is a great idea, this would produce a great incentive to hold Indy, the distributed ADA would be used in part to buy more tokens and the APYs would attract new investors…this would cause an increase in the price of Indy making the SPs and LPs more attractive by encouraging the opening of new CDPs thus increasing the product interests and APYs of Indy (vicious circle). However, we cannot base the rewards only on this also because over time the interests will have to be lowered, the 0.5% commission on the mint is almost irrelevant and must remain

2 Likes

Giving 50% from interests to INDY stakers is going to have a substantial and positive impact on rewards.

Last 30 days INDY stakers received 15k ADA from CDPs mints and 15k from redemptions.

Interests should be similar if you look at the past month (50k ADA). However, we have 500k ADA interests accumulating every month that will be paid one day, so we can’t consider only the 50k ADA from the last month. A future 250k ADA will be possible and also increased with TVL.

So I would like to suggest to also remove the redemption fee for INDY stakers in this proposal. With the redemption fee removed from stakers we can increase the CDP reimbursement fee to incentivize CDPs to be in the redeemable zone.

By doing this we kill the long-term fundamentals for Indy stakers, the rewards cannot only come from interests that will disappear over time

3 Likes

So, today a lot of people have shared their ideas to tweak my idea and its hard to cover all of it. I’m open to changing how the distribution of the interest would go versus what I had temp-checked. However, I’m still most interested in going to vote the way I had it set(X the mint fee and 50/50 split paid off cdp interest to treasury and stakers). I saw the tweet today from the team mentioning possibly doing INDY buybacks, and I wonder if taking some portion of that and doing a “buyback and burn” is doable, and another portion going to the treasury bank. Additionally, another percentage of the ada going to stakers and treasury.

Something like this…

  1. 25% of ada to stakers
  2. 25% of ada straight to treasury
  3. 25% to buy back INDY and bank that in the treasury
  4. 25% to buy back and burn INDY(with potentially a burn target goal in mind and then this 25% gets distributed somewhere else once goal is completed)

I would be very much interested in something like that, as I’m sure other holders would as well. I just feel something drastic needs to go thru to vote sooner rather than later regarding splitting up where the cdp interest goes, as the token keeps falling a lot whilst stakers are getting virtually no ada in rewards.

What is the next step for me to push my original idea thru to a vote? I suggest we do that and then keep tweaking from there. I’m ready to pay the required ada to do so. Thanks

3 Likes

i feel some of that funds should be used to buy back iassets which are below peg which will diversify the tresury , as well as it will stabalize peg of all the iassets.

2 Likes

On my view, it would be great! Except maybe for the burn of INDY…. With a fix supply, I do not see really the value of burning token, if total max supply or burn limits are changed whenever community decide it, we may let protocol get more fragile on a long run… just a feeling

2 Likes

I’m against the burn. Either put it to treasury or keep it in ada for now. Ada to stakers and buyback to treasury are fine though.

Btw, I think this should have a different tempcheck, cause I think this will impact interest accrued from all iassets rather than just iUSD.

2 Likes

Borrow what and from where?

2 Likes

i am against the burn of the indy token,this is not a meme ,100 % in favor of the distribution of the 25 % ada for staking 25 % buy back and 25 % treasury,the other 25 % could go to treasury and find a better use

2 Likes

Interest fee distribution.

  1. Fixed ammount per month to treasury. X
  2. Everything else to INDY stakers. 100%-X
    2.1. 50% of INDY staker rewards in ADA. (100%-X)/2
    2.2. 50% of INDY staker rewards in INDY from buy backs. (100%-X)/2
    *Stakers won’t mind to increase INDY bags, SP stakers and protocol would also benefit from buy back *

May we discuss that kind of model?

2 Likes

On my view, anything from X=33-50% would be great, but we would need to figure out what were Indigo labs mid-term plans for using interest rates to appreciate how to balance things…
I feel that there are 2 main priorities here:

  1. generate more benefit for holding INDY (INDY staker rewards + Support INDY price)
  2. increase and expand protocol use (more iAssets, more use for iAssets)…
    I am very supportive for 1), but I would not like 1) to impair 2)…. We may need Indigo Lab to get to an informed and balanced decision…