Rationale
This VIP proposes a new set of parameters for VAI based on this discussion.
References
- Operation Fix the Peg
- [VRC] Setting the PSM fees and reenabling VAI borrowings
- PROPOSAL: Deploy the VAI PEG Stability module and Supply Liquidity to PancakeSwap for the VAI/USDT Pair
- RWA Strategy - A first Proposal
- Proposal: Real-World Asset initiative
- The solution to re-peg VAI is coming
Summary
Increase the steepness of the interest rate curve of VAI to incentivize VAI close to $1.
Motivation
- Harden the peg by making it expensive to borrow VAI when the VAI price is low.
- Provide a better rate for borrowers when VAI is at $1.
Specification
Modification of this VIP:
-
baseRate: 3% (from 4%) -
floatRate: 4000% (from 225%)
We provide below an exemple of the implication of the changes:
This VIP doesn’t enable VAI borrowings, this will be enabled in a following VIP contingent to having a significant healthy buffer in the VAI USDT PSM.
Risk Analysis
- Reduction of earnings if VAI stays at $1
- Increasing the VAI borrow rate might reduce VAI borrowings and TVL