Strategic Adjustment of iUSD MCR

Temp Check Polls
27

How to destroy Indigo in 2 easy steps.

6 Likes
28

I voted “No” because (1/5):

This proposal penalizes those who maintain good collateral health.
My friends at Yielding Hacking and I, who combined several protocols, building money-lego on the basis of CDP in indigo, left 240% collateral, to protect ourselves from a drop of up to 50% in the price of ADA (liquidation at 120%) . With this proposal we will be forced to increase our guarantee to 300%. That’s not fair!

Vote no! Change your vote!
The protocol belongs to those who use it, not those who do it.

14 Likes
30

Fully Agreed

Personally I am more of a fan of increasing it to 200% and fixing the depeg in one fell swoop

Then working from there

Zygo

4 Likes
31

I voted “No” because (2/5):

The 20% margin for iUSD CDP liquidation already fulfills its role of “guaranteeing” liquidation before the collateral falling below 100%.

Vote no! Change your vote!
The protocol belongs to those who use it, not those who do it.

16 Likes
32

I voted “No” because 3/5:

Your proposal writer argues:

The increase to 150% MCR is designed to quickly stabilize iUSD and realign it with its peg.

The proposal will promote this by forcing CDP owners to increase collateral health. One way is to buy back iUSD and burn it. Another imposition falls on position holders in the stability pools who will need to repurchase iUSD in the market to replace their burned iUSD in the liquidation chain when the proposal goes into execution.

We are not naive, you recover the peg and a week later you lose it again, what are you going to do? keep increasing the MCR over and over again?

Craziness!

Vote no! Change your vote!
The protocol belongs to those who use it, not those who do it.

16 Likes
33

it does not solve the problem, people will adjust their CDP to >150% and then what?

2 Likes
34

I voted “No” because 4/5:

This isn’t a playground, it’s real life, real money. Property, sweat, tears.

The proposal is not a remedy for the cause, it is a palliative for the symptoms.

The problem lies in Cardano’s liquidity being in DEX in the traditional AMM model of Uniswap v1, the Wingriders stable pool also does not solve it.

There are two solutions to solve the problem:

  • Arbitration mechanism of the protocol itself;
  • Liquidity migrate to concentrated liquidity pools and order books such as Axo, Genius, and Spectrum v2.

Vote no! Change your vote!
The protocol belongs to those who use it, not those who do it.

14 Likes
35

I voted “No” because 5/5:

I want to humbly ask everyone to look into the fact that this proposal:

  • Does not solve the peg problem definitively, it is an action with a temporary effect, as the problem is the traditional Uniswap v1 AMM algorithm that prevails in the liquidity of the Cardano DEX;
  • Has an extremely negative cost for the project as it creates other problems such as the reduction of iUSD tokens issued due to the requirement for more collateral; mass liquidations of CDP owners who do not monitor their positions on the dashboard and only monitor the ADA/USD quote .

The cost of implementing this temporary solution is too great for all of us, causing a negative effect on the image of the protocol, as it does not have an arbitration mechanism and penalizes the holders who keep the CDPs and stability pools standing.

Vote no! Change your vote!
The protocol belongs to those who use it, not those who do it.

16 Likes
38

This is a tough and most contentious vote we have had on INDY. Likely due to the unknown consequences or or estimation that the iUSD peg will climb closer to $1

I think we may have to take the risk to confirm it will work as intended.

6 Likes
39

Hello, I voted no to the proposal to increase the MCR, for the simple reason that if it increases today, it can also increase again tomorrow, and so on, so I am in favor of creating a proposal that solves this problem, because if we continue to increase the MCR let’s make iUSD assets inflationary and too much supply without demand.

6 Likes
40

Part of the reason it’s taken so long for us to conclude that raising MCR is the appropriate response, is because many of us were in disagreement about doing anything at all. Many of us were of the mindset that markets will correct themselves and a depeg is just a buying opportunity. After many months of discussions, research and debate, a lot of us have changed our minds and are accepting the plain text on page 22 of the White Paper.

That said raising MCR is the tool we have in V1. The protocol was designed this way and using MCR as a flexible incentive is what is supposed to happen in this situation. It wont force anyone to buy discounted iUSD to improve the health of their CDP but doing so is the more attractive and affordable option compared to just adding collateral.

On the other hand I would have liked to see the MCR increase happen over the course of a few epochs rather than a 30% jump all at once. A 5-10% increase per epoch would give ample time for users to adjust to the change. Either way it needs to happen but at some point we should vote to establish some guidelines for adjusting MCR to help ensure user confidence.

7 Likes
41

I understand your concerns about potentially frequent increases in the MCR. However, the intention behind raising the MCR is actually to make iUSD deflationary, not inflationary. By increasing the MCR, we reduce the supply of iUSD, as it becomes more expensive to mint. This decrease in supply is a deflationary pressure, which should help align iUSD’s price closer to its peg. The idea is not to continually increase the MCR, but to find a balance that maintains price stability and matches supply with actual demand

2 Likes
44

Okay, I understand that increasing the MCR will make the iUSD asset more difficult to mint and making it deflationary! theoretically, since the assets already minted still remained on the market, but soon after this increase we will not have definitive results, but rather temporary ones, and whoever is liquidated in the CDPs will only stay in the project if the project presents a proposal that solves the problem in my point of view.

1 Like
45

I was concerned about the depeg initially but after observing what is actually happening, the peg doesn’t really drop much below 90c which means people are willing to pay a 10% premium for whatever coin they are purchasing (which is understandable). When it drops to 85 or even 80c it never stays there long because purchasing at up to a 20% premium becomes too much and it soon repositions back to the 90-95c mark where speculators are once again willing to step in and pay the premium for their coin speculation.

The depeg is NOT spiralling out of control due to an attack. We all know why it’s happening and although it’s not ideal, I don’t believe the protocol will catastrophically collapse in it’s current iteration.

It is unfair for those who actually want a 1-1 stable coin but that must be measured against those who have (in good faith) locked in CDP’s under the current rates according to the current CODE as written and could get liquidated through no fault of their own. That is patently unfair imo opinion and should carry more weight.

Having said all that everyone without exception clicked the the little disclaimer …“I understand that this transaction involves significant financial risks.”

Imo this IS NOT an emergency situation. I have voted NO on this basis.

4 Likes
46

This is flawed logic imo. The deflationary pressure will always be dynamic i.e. FOMO up or down by traders will alter this dynamic every hour. One day 150% will be enough the next day only 140% maybe enough. If FOMO gets real bad (the blow off phase of a bull-market for example) then 250% may not even hold.

Imo at best this proposal will only work for a limited period before it depegs again either up or down. A dynamic automated solution is required not a one-off ‘hope it works’ solution. The protocol is not spiralling out of control.

4 Likes
47

Is this for real? They are changing the parameters for positions already locked in? That is criminal if they are.

3 Likes
48

Yes. They’re trying to. And I agree. It’s absurd.

2 Likes
49

Thanks for your attention!

*English is my 4th language, so I will struggle to lay out my toughts, hope You will get the point.

At moment, it looks like "mega" bullish sentiment regarding ADA price, so people are willing to leverage this anticipated further price move to upside.

Price they pay is enourmous (if trade goes wrong)

1200 ADA@CDP = iUSD (1000 ADA value), then sell at DEX iUSD@0.90 USD (900 ADA value)
if CDP gets liquidated, losses are 25% of ADA.
This is result of lacking leverage trade tools on Cardano, so people pay insane premium for it. That means, there is more demand for INDIGO and LQ (DJED@12,12% APR and iUSD@7.25% APR) products than ecosustem can provide.

There will be a pullback in ADA price!  And all cheap iUSD will be bought back.

As this depeg occured, it opened up great opportunity to bring in USD in Cardano ecosystem.

1000 USD@CEX = 1111 iUSD (1000 USD value@DEX iUSD@0.90 USD), then deposit in SP and farm yield 26.9%(in INDY) and wait for ADA to dip and take position or continue yield farming. Yield for USD from CEX after iUSD repeg = 29.9%

My take on this issue opportunity.

*do not change anything! I agree with those who say that it will create uncertainty from borrowers, this does not inspire confidence and so on. Market will fix it!

No MCR can influence whale CDP!

Also, in blockchain, there is that new thing “lost keys”, so INDIGO may implement something like “dead man’s” CDP burner, “infinite time” and “whale abuse” CDP regulation mechanisms.
One could be CDP fee dependant on time.
As now, 2% CDP burning fee is implemented, but that doesn’t adress “dead man’s” CDP, “infinite time” CDP and “whale abuse” CDP.
Changes could be made to following or somthing like that…
2% CDP burning fee for first 40 epochs, after that 0.05% every epoch accumulated for burming fee, from initial collateralized ADA amount, resulting in MCR decrease.
Total CDP holding cost 3.65%/year (it is offset by staking rewards)
*Also INDY stakers would be happy about better estimataed yearly avereage ADA rewards.

Sometiemes, doing nothing is better than doing something with intensions.

6 Likes
50

I voted “No” for "Strategic Adjustment of iUSD MCR "temp check poll, because:

1/5
This proposal penalizes those who maintain good collateral health.
My friends at Yielding Hacking and I, who combined several protocols, building money-lego on the basis of CDP in indigo, left 240% collateral, to protect ourselves from a drop of up to 50% in the price of ADA (liquidation at 120%) . With this proposal we will be forced to increase our guarantee to 300%. That’s not fair!

2/5
The 20% margin for iUSD CDP liquidation already fulfills its role of “guaranteeing” settlement before the collateral falling below 100%.

3/5
Your proposal writer argues:

The increase to 150% MCR is designed to quickly stabilize iUSD and realign it with its peg.

The proposal will promote this by forcing CDP owners to increase collateral health. One way is to buy back iUSD and burn it. Another imposition falls on position holders in the stability pools who will need to repurchase iUSD in the market to replace their burned iUSD in the liquidation chain when the proposal goes into execution.

We are not naive, you recover the peg and a week later you lose it again, what are you going to do? keep increasing the MCR over and over again?

Craziness!

4/5
This isn’t a playground, it’s real life, real money. Property, sweat, tears.

The proposal is not a remedy for the cause, it is a palliative for the symptoms.

The problem lies in Cardano’s liquidity being in DEX in the traditional AMM model of Uniswap v1, the Wingriders stable pool also does not solve it.

There are two solutions to solve the problem:

  • Arbitration mechanism of the protocol itself;
  • Liquidity migrate to concentrated liquidity pools and order books such as Axo, Genius, and Spectrum v2.

5/5
I want to humbly ask everyone to look into the fact that this proposal:

  • Does not solve the peg problem definitively, it is an action with a temporary effect, as the problem is the traditional Uniswap v1 AMM algorithm that prevails in the liquidity of the Cardano DEX;
  • Has an extremely negative cost for the project as it creates other problems such as the reduction of iUSD tokens issued due to the requirement for more collateral; mass liquidations of CDP owners who do not monitor their positions on the dashboard and only monitor the ADA/USD quote .

The cost of implementing this temporary solution is too great for all of us, causing a negative effect on the image of the protocol, as it does not have an arbitration mechanism and penalizes the holders who keep the CDPs and stability pools standing.

Vote no! Change your vote!
The protocol belongs to those who use it, not those who do it.

8 Likes
51

Don’t waste your time.

There are more serious and stable protocols in their rates, which do not get carried away by the fear of the moment.

Lenfi V2 will soon be launched, and with Djed and other stable coins, INDIGO will lose more interest. This could lead to Indigo losing most of those who trusted the protocol, and they will see it as a scam.

If tomorrow Cardano quickly rises to 3 USD, the Peg will detach again and they could propose again that the MCR be at 250% to slowly lower it to 150%. This could generate fear in the market and guess who will be the most affected.

Could it be that they want to liquidate faster to reward the holders of INDY in staking? Remember that the team has more than 10% of all assets, if I’m not wrong, I think it’s 20%. It’s a good way to get quick returns.

I will pay my debt as soon as possible, before tomorrow they decide that the MCR will be at 200% due to pure speculation of what is happening in the market.

I would agree with the proposal if the rise were slow and programmed. If what they want is to raise it to 150%, do it but slowly, at 5% monthly, and leave it fixed so as not to create distrust in their investors.

I hope that Lenfi is launched soon, and also USDM. With that, I will say goodbye to iUSD and Indigo.

4 Likes