Author

desnake

Summary

Update parameters of USDC, USDT, DAI, GHO, crvUSD pools’ IRMs to improve market rate discovery process & make it more borrower-friendly, decreasing rate wicks.

Motivation

In the last week base rate of USDC pool spiked 2 times, reaching >66%, smaller pools like USDT & others are even more prone to this behaviour (base rate in USDT exceeded 100% 2 times in November). That underlines two problems current IRM configuration exhibits:

1. Lack of market rate discovery possibilities Borrowing rate is either too low or too high, without anything in between. That makes rates more dependent on quota rates, which may be suboptimal in a such an quickly changing market.
2. Bad borrowers UX Currently the IRM part to the left from U2 (90%) is almost flat, while above U2 it’s very steep. That makes target rate to be very close to 90% which makes it prone to immediate spikes in case of LP withdrawals.

Specification

ETH & WBTC pools

There are less problems mentioned above in WETH/WBTC pools, but it’s also proposed to decrease max rates to values sufficient for making borrowers decrease positions in a more gentle way.

Parameter	Proposed value
r0	0
r1	1
r2	1.5
r3	20
U1	70
U2	90
isBorrowingMoreU2Forbidden	true

Stablecoin pools

The proposed IRM to be deployed and set for USDC, USDT, DAI, GHO & crvUSD pools is as follows:

Parameter	Proposed value
r0	0
r1	2
r2	5
r3	23
U1	70
U2	90
isBorrowingMoreU2Forbidden	true

Tx log

Txs log is available here. Md5 checksum is c748b17629433f65e1085e3a41d46dfd.