Rationale
Following the recovery of the VAI peg, this VIP enables VAI minting by borrowing.
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
- The solution to re-peg VAI is coming
Summary
Following the recovery of the VAI peg, this VIP enables VAI borrowing by setting a borrowing cap at 10M (i.e. could mint until there is 10M VAI in totalSupply, currently ~4M).
Motivation
As evidenced by the chart below, thanks to the work done those last few months, the peg is now in a way better shape with a tracking error around 25bps. Adding more liquidity as proposed should reduce the error below 10bps.
The VAI PSM is starting to replenish after having lost its initial allocation. The new interest rate curve saw little loan repayments, but still enough and the trend is encouraging.
Therefore, there is no reason in our view to delay VAI borrowing anymore.
We are monitoring the situation and might propose interest rate changes to optimize both the peg and Venus revenues while keeping stability and predictability for borrowers as much as possible .
Specification
Modification of this VIP:
-
mintCap: 10M (from 0)
Risk Analysis
- Significant borrowings could impact the price of VAI
- BUSD is still used as collateral for some legacy VAI borrowing