Currently the only effective way to address iUSD depeg is to halt minting iUSD. There is around 11.5 mln iUSD in circulation currently. In the given market conditions and level of activity in Cardano right now it is quite a significant number.
Increasing RMR does not guarantee further minting and diluting supply. Large CDPers have funds to increase collateral and keep on minting. High RMR will not work. You can make 600% but then the protocol will be useless, there will be no sense to mint. The team is working on algorithmic tools to address depeg which are expected to be far more effective (onchain adjustments).
Until then we can stop minting to effectively address the depeg issue.
This could help peg, though i do have a concern when we turn minting back on. There could be a wave of minting and selling and potential volatility.
Perhaps its better just to increase the “mainteneance ratio”. This would lower the amount of iusd that a cdp can mint. Right now its lower than the redemption ratio. So potentially someone could mint below the redemption ratio but they would get automatically get redeemed so theres no point to having it that low anyway unless we have a stable peg. Which we dont…
But the point is you can increase the maintneance ratio so high that it essentially stops or decreases minting until a peg is reached.
ie increase maintenance ratio to 500% or 300%. And this wouldnt hurt rmr and redemptions, but would slow the minting without completely stopping it.
yes, i also thought that we need an algorithmic rule that in case of significant oversupply (i.e. depeg is 5% or more), the protocol halts minting function so the users will not be able to mint more iUSD or the ‘maintenance ratio’ is dramatically increased automatically as @foxep suggested. Once depeg is within 5%, the protocol resumes minting function or maintenance ratio is decreased back. This way - along with algo interest rate - we’ll have dynamic forces that will regulate the supply in line with existing demand (which are now disconnected).
These are the parameters V2 allows us to change. There is no on/off switch for minting. What you are suggesting is not currently possible without an upgrade to the protocol. You can however propose we increase the Maintenance Ratio which can have a similar effect. You could also propose a large increase in the Debt Minting fee which could make it expensive to mint.
that is a good option too, there is already a separate proposal on increasing the maintenance ratio by @foxep. I think we should all support it and make it to the voting
