We cannot shut off the cauldrons, we can only depreciate them (it’s already the case, nothing can be borrowed from it) but we can’t force users to close their position.
This fix we’re proposing to the DAO addresses that by incentivizing users to repay and close their positions.
In the future, if a WBTC or ETH cauldron was of interest to the users and profitable enough for the DAO, I know for sure that our community will come together and propose the opening of new cauldrons with better underlying tech (V3 or more).
In the meantime we can only use this method to incentivize the closing of these positions.
If the Cauldrons are deprecated already, then that is sufficient. Users will naturally unwind their positions over time as needs arise. The peg is already very healthy and leaving the deprecated cauldrons as is doesn’t hurt anything.
Let’s focus on creating new cauldrons that create new value for the protocol, instead of damaging the protocols reputation with sneaky gotcha that weren’t even supposed to have been possible from the beginning.
It is not, as right now the rates are 0%, which is far bellow market rate.
We therefore need to increase it to stay competitive.
The focus is indeed on the creation of new product, but we can’t keep cauldrons with MIM outstanding costing revenue to the DAO and not being profitable.
I like the plan, can’t have free borrowing in these markets. Only suggestion is going forward have an optional contact field for cauldrons so people can be notified before or when a rate increase is implemented. Communication so people aren’t surprised is a must. After all these are our customers essentially.
If this passes users are just going to withdraw and go somewhere else. We need market rates to be competitive. Think the current borrowing fee is sufficient.
The negative strategy is going to really piss off users that don’t keep up with governance.
I think it is reasonable to raise the interest rate to a rate similar to market lending. It’s about 5%, because the interest rate for btc lending is about 4% in Binance . But the original article mentions it’s possilbe to raise the lending rate to 15%, which means it’s not about earning fees, but forcing users to repay the loan. In a bear market, suddenly doing this is the same as starting to liquidate users because they can’t repay all .
Lending platforms like Binance state the borrowing period in advance before borrowing. But abra never said how long the loan would last, making people think it would be indefinite. The sudden demand for repayment caught people off guard.
Repayment cannot be forced at will, as the user’s borrowed $mim investment is possible in a loss-making state. If we do the same in the future, I think this lending platform is extremely risky. People will avoid using it.
I can respect the bear market pain and inability to rapidly repay debt. I would be open to scaling interest rates at a slower pace in order to prep cauldron users on liqudity changes. Users should understand this is done in the best interest of the protocol and future cauldron capacities
