Why:
Further incentivizes peg stability.
How:
Updating iUSD Parameters to RMR = 250% allows more redemptions at oracle value which aids peg stability.
Why the only change is to increase RMR? How will the peg hold after the redeemable CDPs are spent? How is this addressing peg long term?
If you want to go for quick and easy solution and to at least try to hold the peg long term, in the current market conditions, you have to limit selling pressure and the main source of the selling pressure is minting&selling strategy, in my opinion. Therefore I think, that to at least have a chance to hold the peg, the protocol has to temporarily limit minting.
To do that you can use RMR, but it is not its main purpose and drastic increase of RMR is harmful to the protocol, because it will burn through the CDPs, decreasing TVL and decreasing revenue for the protocol (less collected interest).
To limit minting it is better to use MR.
I would say, if we really want to go down this path of quick, easy and dirty solutions of fixing peg at least combine in one proposal the increase of RMR to 250% and increase of MR to e.g. 600+%, so it is much harder to mint new iUSD and sell.
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how does it help the peg? people with ADA bags will add more collateral and keep on mintingā¦ smaller CDPers will be sacrificed but it will not change anything as they are small (otherwise they would increase collateral)ā¦ bad for the protocol, as it becomes more dependent of fewer users (whales). RMR does not addresses the root cause of depeg, which is - iUSD price is determined purely & exclusively by the trades in iUSD/ADA pools. If I could redeem iUSD for $1 worth of ADA at any time, that would immediately restore the peg. So Indigo should think about developing such tool/algorithm/solution regardless of CDPs. But for now yes, we can stop minting option.
i feel lets decide duration of RMR as well.
it is ok to have high RMR but it is not desirable to keep it active indefinitely.
and it takes forever to change any parameters throgh DAO.
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@cajlan @Vlashe
I agree that increasing RMR is only a short term solution but this short term solution is all that is necessary in this market climate. The depeg is caused by speculators over leveraging their debt position in order to capitalize on an anticipated bull market for ADA (which is their collateral). So the incentive is to leverage as much as possible, to capitalize as much as possible. In this market climate, increasing RMR allows users who hold the iAsset to redeem it for its ADA value 1:1. Avoiding having to take a loss by selling to a dex which is where the depeg is realized. This in tandem also reduces the āover-supplyā of that iAsset by burning that iAsset against a users debt position which is a net benefit to that users CDP health factor.
Non of this would matter if ADA was moving upwards and to the right because there would be a fair amount of users willing to take profits and hodle iUSD. What do you think is going to happen to peg when ADA hits all time highs. The incentives will switch. Users will not want to leverage ADA against the dollar if ADA is expected to slump downward for a winter session. Peg will reside in the plus range and there will be zero incentive to redeem against anyones CDP. RMR could be set to 800% or 0% and it wouldnāt matter because there would be zero profit motive for anyone to redeem against a CDP for 1:1 when you could get 1:1.1 on a dex. The sooner we incentivize peg out of the negative and into the positive the sooner RMR will become pointless and useless.
Interest is the soft peg mechanism. Redemption provides the semi-hard peg that ideally is never used. These are the tools Indigo V2 offers the DAO to incentivize peg stability. We just need voters to agree and approve us to do it.
4 Likes
I am not against the increase of RMR, but it should not be the only change. It should be in tandem with other changes, because redemption alone will not hold the peg for long and we will end up in the same if not worse place (redeemed CDPs, decreased TVL, decreased revenue for the protocol, still depegged)
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We need to boost the RMR immediately. This depeg situation is causing us to lose the confidence of users. We have the tools provided by V2 for repeg, and we need to use them. Indigo is DeFiās first protocol on cardano with the biggest TVL, so we canāt carry on like this.
Iām in favour of an even higher RMR than that, at 300%, allowing 1,432,000 iUSD to be redeemed. The vote must be taken quickly and without waiting another month.
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I couldnāt agree more with @The_INDY_Man.
No matter what the TVL does and how much it hurts CDP users. The peg is essential and only if the peg is reached the market found a balance.
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I think we should vote it.
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I am missing the rationale hereā¦ ok, if the most important thing for protocol users is to get iUSD peg back (at risk to loose some TVL/users) why should we limit RMR increase to 250 or 300%?? Why not 1000% for few months ?
I am not telling it is what we should do, but I do not understand why 250 or 300% would change anything to the current situationā¦
Happy to have some clarificationsā¦
Another point to me is to understand how much TVL more we are ready to loose to get iUSD back? -20%, -50%, -80% ? Get ready for it and do not complain that INDY spiral down in sub 1 ADAā¦ we are going there slowly, but surely
Finally, I personally do not care about iUSD being peg or not, there are other options for that on Cardano, and there are going to have more at lower riskā¦
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a lot of people will be rekt and left in shamblesā¦ i do not want a blood bath for Indigo users, many are bleeding already having bought ADA at $1-2 or more which is now their collateralā¦ Increasing RMR to 250% is already cruel, 300% is pure savage. We need to give it a break untill ADA at least goes to $0.5 before increasing RMR at all
Cruel to whom?
From the 11M iUSD, around 9M iUSD debt is over less than 20 CDP with a minimal of 88,000 and a max of 10,000,000 iUSD, all with a CR ranging from 220 to 380%
Now who are we targeting to get iUSD pegging backā¦ is it the guy who has a 10,000 iUSD debt and a CR of 185% or is it the one who have 10,000,000 iUSD and 350%ā¦
Then let imagine that the one have 10,000,000 iUSD with a CR at 350% is long ADA and put back them as collateralā¦ you will have to blood bath many more like the first guy to balance the behaviour of few like the secondā¦ it is probably what has happened alreadyā¦
in some way, increasing interest rates massively for some time would be more fairā¦ but it was rejected at the last voteā¦
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A lot of people will get rekt by 250% RMR, let alone 300%. Many CDPers bought ADA at $0.5 or $1 or $1.5+ long time ago before Indigo, they opened CDP, minted iUSD, bought $INDY or $ADA or whatever some time agoā¦ now happy ābutchersā increase RMR to 250%, and those CDPers get their ADA sold for $0.35, small CDPers are rekt hard. They bought the collateral for x2-4+ times higher price than the have to sell. Big CDPer just increase the collateral to 500% and nothing changes.
Why do not we just close minting option for now? It stops the supply which is the main intention of high RMR, but high RMR will rekt small CDPers, while whales will keep on minting and as they are whales, the killing of smaller CDPers will not help peg. As a result of higher RMR: a bunch of angry/devastated Indigo users and new depeg in 2-3 days. People will suffer for nothing. Stop minting for now and this will be much more effective and fairer solution. Until algo tools are in place.
Yikes bud! Letās not get it twisted here. There are no āhappy butchersā salivating for an impending bloodbath. Indigo is decentralized synthetics protocol that allows you to leverage and speculate according to your own risk tolerance. Just because markets or your individual strategy is not working out for you does not mean we are all āhappy butchersā out for blood. Please try to be pragmatic and constructive here. We work hard and selflessly for the best interest of the DAO as they have elected us to do. We do not deserve such insults.
I understand your position a bit better considering you are not wanting to be redeemed against because of the lack of price appreciation of your collateral. Your ADA collateral being purchased at 1$ and then given to a redeemer at .35 cents is understandably not ideal for you. But you have options available to you to avoid this and itās not the fault of the protocol that ADA has not appreciated. Itās not fair to call the DAO a happy butcher because of market conditions that are out of our control. We canāt burn the house down in solidarity.
Halting minting may be good for your particular situation but the damage to the protocol as a whole would be immense imo. What happens to arbitragers who are locked out of providing this essential service to the protocol. What sort of confidence will users have if the protocol switches on and off all the time. We canāt just shut it down when markets donāt go our way. We must adjust incentives to lead the market in the right direction. Halting minting will not solve anything imo.
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how halting minting causes more damage than high RMR? What is your intention of having high RMR? Reduce supply? Ok, then how high RMR helps to reduce supply if whales (who - as highlighted by Cardaflow - are the major suppliers of iUSD) most likely have deep pockets and just increase collateral and keep on minting? High RMR = no guaranteed result + mess. Halting = guaranteed result + no mess.
And I am suggesting to halt until there is an algo interest rate / fee mechanism + potential algo halting minting in case the depeg reaches certain level (as an indicator of unhealthy othersupply vs demand). That would be far more efficient to address depeg than constantly tweaking RMR which does not work for depeg anyway
Here you can find the dual peg mechanism that came with V2:
RMR is the hard peg mechanism and interest is the soft-peg mechanism that we, as a DAO, can adjust to help repeg happening. Closing iAssets minting is not the right way to ensure peg as you punish newcomers who wants to use indigo.
Right now, the biggest issue i see is that we canāt let arbitrage ongoing because the RMR is too low (185% right now). With arbitrage it encourages users to buybacks/ buy on DEX iUSD that is depegged and redeem it to 1:1 on indigo. This will occur a buying pressure on the stablecoins and thus force repeg.
And tbf, numbers has changed. With 250% RMR, 460k iUSD is now redeemable.
Based on Indigo Insights
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The problem, I see, is that we do not have the soft-peg mechanisms fully realized yet. Yes interest is accumulated, but currently protocol does not use this revenue at all. And you push only for the hard-peg changes, which should be used as a last resort depeg reversal. It is like jump starting car with no fuel in the tank. The redemption itself will not hold the peg for long, you need soft-peg mechanisms to take over once the car is jump-started. And keep in mind that interest is a huge part of the revenue for the protocol and when you redeem a lot of CDPs the revenue plummets. I agree that RMR should be increased, but it should not be drastic change and it should not be the only change.
Serotonin has a couple of interesting ideas how to use the revenue from interest and how to change the rewards structure to help the iUSD peg. Also dynamic interest rate and the requirement to pay off the outstanding interest when changing CDP are coming. These are the āsoft-pegā mechanisms we need in place before we start drastically changing the hard-peg ones.
But if we really want to push the increase of RMR now and we really care about peg long term, we should consider also other changes to complement the increase of RMR. e.g. to temporarily stop minting or to change the MR to some high value
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Hard no vote here. The peg maxis only show up when ADA is crashing. This is not the time to change the RMR. Do it when price stableā¦or how about (insane thought here), do it when ADA is actually going up?
All you want to do is destroy the CDPs and change the rules on them because you want to buy iUSD and redeem it. This is not a good reason to kill the platform.
The peg maxis have kept doing this and continually increased the RMR on iUSD. It has never worked. If you keep thinking the same action will cause a new result, that is the literal definition of insanity.
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