Change the DAI bonding curve parameters to get 50M more DAI in the PCV.
Motivation / Background
We are at a healthy CR of over 300%, but that may change in the future if a bear market comes or if the merge happens and a lot of large TRIBE holders ragequit. To be on the safe side, I’d suggest we get more stablecoins in the PCV, while the protocol is so healthy.
this is also a good opportunity to modify the buffer parameter. empirically the current 1% value is too high for the bonding curve to ever be used once scale is reached. we should try out a lower buffer, with relatively low stakes, to gather data on how buffer relates to usage
Moving to last call, since the technical specification of this proposal is very simple, we don’t need many iterations, mostly a snapshot to know if there is support or not
I’ll snapshot in 2 days with the parameters suggested by Storm if no further discussions happen.
as things stand stables can cover a majority of outstanding user owned FEI, and undoubtably a considerable percent of the user owned FEI is borrowed from various platforms. The borrowed positions are most likely to be unwound in case of a bear market.
With currently PCV holding, it would take something like an ETH plunge to ~$750 to cause real collateralization problems. Merely assuming Brownian price movements, it is very unlikely such an development materializes quickly.
Also DAI itself is mostly collateralized by ETH, if a plunge to ~$750 is to materialize, it is more likely that DAI’s own peg would fail before FEI’s peg can fail. There is also the consideration of creating systemic defi risk of stablecoins all cross-holding each other’s tokens. This is somewhat analogous to Japanese banks depositing their assets into each other in the early 1990s, before the bubble burst caused technical insolvency to proliferate.
On a third note, which I understand is very unflattering to all of us and the protocol; Fei’s incredible war chest and policy runway is mostly a function of ETH hodling, there is no evidence to suggest any single trader engaging in “timing of the markets” have beaten ETH hodling in ETH’s entire history. 60% of professional fund mangers making millions fail to beat the SP500, and the statistic for retail traders is more dire, along the lines of 90%.
As I have opposed every single measure of PCV diversification into stablecoins in the past, the core tenants of my belief has not changed, and I am steadfast in opposing any future measures of exchanging more PCV assets, especially for other Stablecoins similarly backed by ETH.
The position of TRIBE is to continue to hold substantial reserves in ETH, amounting to a long position in ETH, which I think is a sound strategy with continued growth in the Ethereum ecosystem. The DAI reserves is a function of participating in Curve, and based on the Diversification framework the allocation is still within policy limits. I’m in favor of this proposal with the expected deployment into the Curve ecosystem.
I agree with Cozeno’s position, and if we intend to move more towards Curve we should include Curve as part of the proposal. Also, being more reliant on questionably decentralized stablecoins isn’t fun.
