Do you have examples of other synthetic asset protocols increasing the MCR and the result of that? I don’t count temporary recovery modes as increasing the MCR.
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This doesn’t seem like a well thought out, measured approach to the current situation.
Why an MCR of 150? Why not 160 or 140?
How much will iUSD supply be affected by this change?
Where will this move the price?
While it might seem “transparent” to people who use Discord or frequent these forums, it won’t be to many users.
What would be better is a proposal on how to systematically manage the MCR in a predicable way which folks can agree to before taking out large loans. Changing people’s loan terms after the fact seems like bad business.
This isn’t an emergency, it’s market forces at work. We shouldn’t be making one off protocol changes to fix symptoms of temporary problems, but should apply a carefully considered, predictable approach. To do otherwise will undermine trust in the protocol.
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quickly stabilize iUSD and realign it with its peg.
How do we know this will stabilize the price of iUSD and not send it up over $1? It seems like starting out with a high MCR would lead to a more stable price for a new iAsset, but shifting MCR upwards will shift the supply/demand curve in unpredictable ways as people scramble to purchase iUSD to repay their debts to avoid liquidation.
If the demand you propose we create causes the price to rise above $1, this will be very bad for everyone who holds iUSD debt if they need to pay down their debt due to ADA price retracement.
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I would say most of us can agree on at least a few things.
- Minor deviations in iUSD peg is to be expected given that it’s a synthetic stablecoin traded on the open market and subject to supply and demand.
- Larger iUSD peg deviations can be damaging to user confidence, adoption and the protocol itself.
- Users need some level of confidence that the rules of the game won’t change suddenly and/or drastically, forcing them into unforeseen risk scenarios.
- Doing nothing in V1 to encourage peg stability could damage user confidence, adoption and the protocol.
- Raising MCR in V1 may also damage user confidence, less so for adoption while strengthening the protocol in terms of solvency and system CR.
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This looks to be contentious. I may strongly disagree with a lot of what Indigo Labs does and am saddened by many of their decisions after having worked so tirelessly on building the protocol, but I hope they can make the right decisions in the future. I’ve casted my vote on-chain in support of this proposal. Among the people it’s pretty divided. It may boil down to what Indigo Labs sees is the best strategy, since really it’s only their vote that matters.
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I do not think the depegging problem will be solved at all because iUSD is simplay a synthetic coin. And there are some other actions possible to mitigate the depegging. (incentives, more moderate changes of MCR)
All current users are probably aware of this fact. So they did an agreement with the protocol, which will be now broken.
So keep the old contract as they are, put more incentives to hold iUSD and apply MCR changes to new contracts only.
“It’s up to you to increase the MRC by 500% because your proposal didn’t work. And again, I told you, be careful with continuing to break the trust of those who ask for CDP. Now there will be more people who will want to sell their iUSD. It’s up to you to investigate well to see how it works and solve this, (I already gave you a solution). In the meantime, I will continue to watch what you do.”
This is case of FREE leverage!
Until we implement time dependent CDP fees, depeg will have wide range and continuity.
At this moment, levereging @indigo costs 2% (burning fee), but if CDP is not burnet, it can stay open for ever and we have free leverage tool. (That is not a norm of industry!)
-You may take a look, how much it costs to borrow in other protocols.
I would suggest to implement something like following…
if CDP is burned in first 40 epochs from minting, collects 2% fee for stINDY.
if CDP is held open after 40 epochs from minting, additionall 0.05% fee every epoch is reserved from collateral and CDP’s CR is decreasing.
additionall fee will not influence debt amount which is deposited in SP!
to lower additionall fee, you should stake INDY!
Dicsount = (stINDY / total stINDY) / (iDEBT / total iDebt)
Maximum discount should not exceed 100% of additional fee.
Do I have to list all benefits from implementing this kind of fee structure?
***fees must be higher that mentioned above (look at market average and stay competitive)
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This make a lot of sense. I wonder if this is technically feasible atm?
I’d like to see it at 73 epochs (1 year) before an additional fee is added.
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Maybe open a new thread with your suggestion since this one has served its purpose.