the value of unpaid interest is accumulating but not being used, the value of the interest that is unpaid in the cdp can be used to help the peg and make sure that cdpers are keeping up with their interest owed in due time.
if interest is due, in, lets say in 1 year from being charged to the cdp and has not been paid for, then we can set it up that if there is a depeg, we would take the value of PART of the unpaid interest accumulated and redeem that value of the cdp debt at par, this would redeem the cdps debt from their own collateral, in the amount of a small portion of interest owed.
this would mean that the cdp would lose collateral and be redeemed in an amount of ADA that matches the X% value of their unpaid interest. the cdp can avoid this redemption by keeping interest paid within the year it was charged.
interest is already being used to support the peg but at the expense of the dao. this would put more responsibility on cdps to pay for their interest in due time or be redeemed a small % screenshot of their interest owed and having that come from the cdp to redeem debt at par.
it wouldnt have to be the entire amount of interest. perhaps 10% or 20% of the unpaid debt interest accumulated for x period of time
Unpaid interest can’t be used as they’re unpaid no matters if it’s 3 weeks or a year… You can’t use something you don’t have.
Moreover, 30% of interest serve to buy back iAssets. You can put a temperature check about how do we consider these buybacks. Let’s say If with 30% we got 825K ADA we can do something like 50% iUSD, 25% iETH/iBTC.
Thanks for your read on this INDY Man. The cdp owner would be responsible for a screenshot of the interest owed for this.
if cdp has 10k iusd in unpaid interest, you say they need to pay x amount off, or even all of the interest off, by a certain date.
If they do not pay the interest off then well take 10% of interest owed, in this case 1k of their iusd debt will be subject to redemption from their cdp.
This would incentivise cdp owners to pay off their interest, or a part of their interest in due time, or else be subject to redemption of a small portion of that interest owed.
This really wouldnt need to be done if fhere is no depeg.
This proposal would turn the responsiblity of the peg to cdps in a small way by making them be responsible about paying their interest in time or else be redeemed a small amount. This would also get unpaid interest flowing faster.
Cdps would still have to pay their outstanding interest that is building up. So the revenue coming from interest would not change and we can still use it for whatever.
I see it that interest going to buybacks is being paid for by the dao and indy holders. This is not ideal when indy holders could be benefiting from the revenues from the protocol instead of burning it to keep the fire going for iusd.
I did see the buyback proposal and did commented on it. But for me its kind of black hole to try to keep iusd afloat. It may invite more shorts if they see iusd is being inflated beyond its true form, ie. based on interest and rmr and demand so it can be a battle with shorts that requires some muscle.
So what i wrote in the other proposal was that id prefer on using the interest and buybacks in a more derrivative and options contract style where a small amount of capital can potentially represent a larger share amount in the end to make buy backs more impactful.