SCCP 30: Lower c-ratio to 700%

Simple Summary

Decrease the target Collateralisation Ratio for SNX stakers to 700%

Abstract

There is currently a potential deficit of Synths that is coming to Synthetix platform. Decreasing the target Collateralisation Ratio will cause some SNX stakers to increase amount of synths minted.

Motivation

  1. Current peg is holding up great due to Curve. This can be seen from data collected since lowering it to 700% in SCCP-26.
  2. Launch of Idle integration allows to increase the demand to sUSD overall
  3. Accroding to this: https://blog.synthetix.io/optimize-your-susd-yield-with-idle/
  • “The Idle team is currently working on a solution that will enable users to deposit sUSD into protocols that allow them to earn popular governance tokens such as BAL and/or CRV to earn alongside their holdings.” I think we must take advantage of the current Yield Farming craze and allow SNX Governance tokenholders to capture more value
  1. Capital Efficiency!
  2. Increased demand for synths will drive more integrations with other DeFi platforms
  3. Synthetix platform will be able to potentially showcase the ability to deliver rapid iterations
  4. Increased amount of SNX holders that will come to the platform will be able to see upcoming updates such as Synthetic Futures, sOIL, Limit Orders and Binary Options.
  5. It will allow us to further collect data on stability of the peg and allow precipitate the deamand.
  6. sUSD peg constantly moving to above 1 USD
  7. We now have liquidations
  8. We voting on reducing Liquidation window from 2 weeks to 3 days

Copyright

Copyright and related rights waived via CC0.

Author: SynthAman

1 Like

I am also totally agree with the proposal of lowering C-ratio to 700%.

Reasons

  1. As of now we have proper liquidation mechanism to protect synths at worst scinario.

  2. Claiming fee period also reduced from 2 weeks to 1 week to maintain the required C- ratio at all times.

By observing above, I feel that we have perfect mechanism to protect Synths.

It’s time to meet the new demanding needs from all the integrations happening with the Synthetix. Ex : Curve, Idle.finance, Payments, Trading, dHedge, and many others are in pipe line.

Until we introduce new collateral options like ETH, BTC to mint Synths, we should have enough supply for the demanding needs. Otherwise there will be problem of paying premium for entering Synths by Traders and others.

Right now we are experiencing the sUSD price deviating from its peg of 1$.

It’s time to act accordingly .

My reply is outlined in Reduce Rewards on Curve - SNX 24,000 alternative proposal where I set out why we should cut SNX rewards on Curve first.

@KALEB point also makes sense to not get diluted for minters before making decision on C - Ratio cut.

Because after incentives started from Curve and iearn.finance with CRV and YFI tokens for providing liquidity to Curve pools, which makes it look like that there is already better deal without any incentives from Synthetix. But to make the pool attractive for the LPs then instead of removing entire SNX rewards, we should think of reducing SNX rewards for the pool from 32000 to 24000 and may be gradually in decreasing trend.

Yeah CRV tokens are currently going to be airdropped to those who provide liquidity to Curve… So that on it’s own, is what I feel is causing the premium, as people just want to get their hands on CRV tokens. Although the distribution is not clear… Nevertheless, we don’t need to leak value as minters as much is my point on decreasing sUSD rewards.

On board. SNX has become more liquid as of the past 1.5 mo with more trading activity, exchanges, and lending platforms integrating it. It can probably handle this reduction.