STOP XVS REWARDS FOR BORROWED XVS
We are currently distributing rewards to XVS asset, paid in XVS, split 50/50% to suppliers/borrowers according to the protocol rules (not easy fix without mayor upgrade to the main code as informed by the community). However, borrowing is capped and not possible now.
The result is that we have a small group of 88 borrowers that are the only ones allowed to borrow XVS and they are getting a large APY, ~ 17% APY return (~-16% Borrow APY and +33% Distribution APY) while the suppliers are getting a 2.57% APY return (~0.72% APY and + 1.85% Distribution APY). This issue has been subject to criticism for a long time by the community due to being unfair to the majority of XVS holders (currently ~14k suppliers of XVS and only 88 borrowers).
It is important to mention that supplying XVS is betting long on XVS and borrowing XVS is essentially a short bet and that the LP Farms currently borrowing XVS put a constant sell pressure on XVS.
The proposed quick and easy Solution:
Reduce the distribution of XVS to XVS asset vault from current to 0 (zero). The result of that small change that can be very easily implemented via a quick change of parameters via a VIP will be that the borrower’s yield will change from +17% APY to -16% APY. Suppliers will also get a reduced APY, from 2.57% to 0.72% APY but, its a Small price to pay by the HODL group, because the immediate effect is that the borrowing group will start repaying/contributing to the protocol instead of benefiting from it. The logical next move by the borrowers will be that they will return their borrowed XVS and at that point our new XVS vault will almost be ready to launch as well, with MORE XVS DISTRIBUTION REWARDS for XVS HOLDERS IN THE VAULT.
These changes can be implemented in days without complicated coding or audit.
We are all very happy for the new changes that will come with the new vault and the bright future of Venus. This is a fair move to reward the community and stop the unjust distribution of XVS rewards to a few borrowers only.