Proposal for Adjusting RMR and Enable Redemption for iETH

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Proposal for Adjusting RMR and Enable Redemption for iETH

Motivation:

With the recent launch of Indigo protocol V2, we now have the means to redeem iAssets as long as there are CDPs below the RMR(Redemption Margin Ratio) Parameter. However, as of now (4 May 2024), RMR has been set the same as the Liquidation Ratio, which effectively disables redemption and makes it impossible to arbitrage iAssets from Dexes.

Adjustment Proposal

Given that iETH is “only” at ~5% depeg at the moment, I suggest we set the RMR to the same value as the Maintenance Ratio of 150%. I suggest the DAO decrease this value once/if the peg stabilises.

Summary:

Parameter Name Parameter Value
Redemption Margin Ratio (RMR) 150%

This proposal aims to enable redemption, allowing users to arbitrage iBTC from the open market against CDPs with CR under 150%. This will hopefully help with the depeg the iBTC has been suffering for the past few months.

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I suggest to be a bit more aggressiv of the initial RMR value.

Let’s start with 150% which is MR+20%. It’s less then iUSD, because iETH wasn’t usually as much in the discount as iUSD.

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Just made a poll Poll: Proposal for Adjusting RMR and Enable Redemption for iETH

I will update the RMR value to whichever wins.