Update iUSD = Stability Pool Withdraw Fee to 0.1%
The Stability Pool withdraw fee is currently set to 0.5%. This proposal aims to lower the Stability Pool Withdraw Fee to 0.1% for iUSD.
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Why? What is your intention to do it?
I see only a negative effect as long as we have the discount. The SP holds a bunch of iUSD which can be released easier with a lower withdraw fee.
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As mentioned in discord, this fee is intended to be a disincentive if the system is being gamed in a particular way, which isn’t currently an issue. Unnecessary fees can hinder participation and utilization. We will likely adjust this metric many times in the future to respond to different market conditions. For now though, a higher withdraw fee is likely hurting more than it’s helping.
How do you make sure that the fee is back as soon as we need it? I understand and agree that the fee is not needed at the moment because iUSD is traded in a discount, but as soon as it’s trading at peg or in a premium we need it. The governance is not fast enough to handle these constant changes in my opinion and the fee has a purpose.
Explanation for users that do not know the purpose:
“It’s meant to keep users in the stability when liquidations occur. In the past people withdraw their position shortly before liquidation happened to safe money.”
I’m not in favour of the proposal, because it open the gates to play the protocol and the benefit of lowering is an assumption that the hinder participation and utilisation. Are you able to provide proof for your assumption?
The currently 20% rewards are high enough to compensate the withdraw fee. A SP user only have to be 10 days in the SP pool to withdraw without a loss.