AIP #13.1 - $CRV Interest Rate Adjustment
TL;DR: Allow interest fee reimbursement to selected users using the CRV cauldron, in exchange for veCRV votes to be used to increase protocol liquidity.
Introduction
#AIP 12, which was passed 2 weeks ago, granted permission to the protocol to rapidly react to future events in the case where interest rate adjustments need to be made quickly.
This proposal discusses an interest rate adjustment that will add a minimum rate to the CRV cauldron. The initial interest rate of 18% can be reduced to a minimum of 11% through the use of veCRV votes towards the protocol’s MIM3pool, for whitelisted users.
Votes will be valued on a week by week basis and refunds will be given every Thursday for the previous week’s votes.
This addition will allow whitelisted users to control their interest rate on CRV, by dedicating their voting power towards our MIM liquidity.
Methodology
In order to create variable interest rates for specific CRV cauldron users, we have come up with an innovative way of managing such reimbursements:
In exchange for an interest rate reduction on their MIM borrowed using CRV as collateral, select users will be able to use veCRV votes towards pools that are important for our protocol. While this reduces our interest that we collect, this will also reduce the amount of bribes we need to spend maintaining deep liquidity on Curve.
Every Thursday, depending on how many votes are coming from these whitelisted users, the treasury will price such votes, and reimburse them with MIM tokens directly, effectively lowering their interest paid from the cauldron 18% to 11% it is agreed upon by the parties.
As usual, interest and fees from the cauldron will be distributed to the treasury and SPELL stakers, but in light of this deal, will be given net of reimbursement. This means that if the whitelisted user is effectively paying a 11% APY, then the full 11% will be counted as protocol profit and will be split between the treasury and stakers.
Note: To take part in this initiative, whitelisted voters will need to send SPELL bribes back to the Abracadabra Treasury to receive the reimbursement.
Current Limits:
Maximum rate: 18%
Max. weekly increase: 2.5%
New Limits:
Maximum rate: 18%
Minimum rate (veCRV discounts for whitelisted users): 11%
This would significantly increase our CRV cauldron usage, as well as lower our liquidity cost, which reduces emissions.
Are you looking to be whitelisted?
If you are interested in taking part in this deal, please reach out to one of our core contributors or moderators on Discord, and we will start the conversation to include you in the whitelist!
Note: This offer is currently limited to users who are borrowing 2M $MIMs or more. As we come up with more automated solutions, we will lower this limit.
In the future, we will be working on a trustless and permissionless infrastructure for such deals, so stay tuned for the tech implementation!
Voting
Voting will start in a streamlined fashion, tomorrow at 10:00 AM CET and last 24 hours.
Option 1: Keep current limits
Options 2: Change to new limits
The proposal has passed! Check the snapshot voting here!