Compound

Summary

Over the past several weeks, Dharma (in collaboration with arr00) has written and tested a new version of JumpRateModel and integrated it into an updated interest rate model for cDAI. This updated interest rate model allows for the following parameters to be updated by governance proposal (ie. no-code updates):

1. Interest Rate at 0% Utilization
2. Interest Rate at 100% Utilization
3. The Utilization % at which the model “kinks”
4. Interest Rate at the “kink”

We believe this model can form the basis for the interest rate models of other cAssets, including cUSDC and cUSDT, which we believe should have models of a similar nature. We encourage other community members to adapt this code to do so, and will enthusiastically support proposals to update the interest rate models of other cAssets to models of this format.

This proposal was discussed in the governance forum prior to submission.

Specifics

• New cDAI Interest Rate Model: Deployed Contract
• New cDAI Interest Rate Model: Github Link to PR
• Interest Rate Model Parameter Changes:
  • Change APY at 100% utilization:
    • Current: 15%
    • New: 25%
  • Change the Utilization Rate that defines the “kink”:
    • Current: 90%
    • New: 80%
  • Change APY at “kink”:
    • Current: 2%
    • New: 4%
  • No change to Base Rate per Block (APY at 0% utilization):
    • Current: 0%
    • New: 0%

Note: all rates are still “on top of” the DAI interest rate parameters set by MakerDAO governance.

Image of Proposed cDAI Interest Rate Model