In response to the concerns raised regarding the proposal to increase the MCR to 150%, and recognizing the importance of price stability for the Indigo Protocol, I propose the establishment of a DAO policy to manage iUSD price fluctuations more predictably and transparently. This policy is meant to manage iUSD price fluctuations more systematically until more sophisticated tools are available with Indigo Protocol Version 2, expected in Q1 2024.
This policy aims to maintain the price stability of iUSD within a specific range, ensuring confidence and consistency in the protocol’s operations.
Proposed Price Range:
For iUSD, a reasonable trading range is proposed to be between $0.96 and $1.04.
- Monitoring: The DAO will monitor the average trading price of iUSD over a rolling 30-day period.
- Intervention Threshold: If the average price over this period falls outside the $0.96 to $1.04 range, the DAO will intervene.
- MCR Adjustment: The intervention will involve adjusting the MCR in a way that brings the price back within the proposed range.
- If the average price is below $0.96, the MCR will be increased to reduce supply and support the price.
- If the average price exceeds $1.04, the MCR will be decreased to increase supply and adjust the price downwards.
- Temporary Solution: A stop-gap measure until Indigo V2 provides more robust tools for price stability.
- Predictability: Establishing a clear range provides transparency and predictability for all protocol users.
- Responsiveness: Enables the DAO to respond effectively to market conditions, maintaining iUSD’s peg to the USD.
- Prevents Extreme Fluctuations: Avoids drastic changes and maintains a stable market environment.
This proposal is a temporary but necessary measure to ensure iUSD’s stability. It sets a clear policy for DAO intervention based on the proposed price range, leading to a more predictable and stable environment until the release of Indigo Protocol Version 2.