Summary
A proposal to reduce BNB’s Kink.
Motivation
Binance recently conclude its DOGS Launchpool event: a 3-day period during which users were able to deposit FDUSD and/or BNB to receive DOGS token rewards. Notably, this overlapped with the TON event, which is scheduled to last 20 days, significantly longer than usual; there are 6 days remaining as of this writing. In our previous analysis of the BNB IR curve, we noted that borrowers tend to be more rate sensitive as Launchpool duration increases. This observation has held true during the TON event, with borrow rates averaging 6%.
Additionally, this was the first time in recent history that two events have coincided in this fashion, with one beginning and ending while another event is ongoing. As a result, deposit activity in the DOG event was relatively low, peaking at 11.2M BNB, whereas all recent events have topped 18M BNB.
We observed that Venus BNB borrow utilization peaked just after the end of the DOG event, rising slightly above the target rate at the Kink as Utilization briefly reached the optimal level.
Given the under-utilization for the vast majority of time during the TON event, we propose lowering the Kink to better optimize the market, ensuring that the protocol and suppliers benefit during periods of high demand while also ensuring that long-term borrowers do not face higher rates during periods of lower demand.
Recommendations
| Current | Recommended | |
|---|---|---|
| Kink | 70% | 50% |