Peg Stability Measures: Changing yvDAi interest rate

Given the recent market scenario, it is time for Abracadabra to use the new tools we developed in order to bring MIM back to peg.

Raising Interest Rates

In the last few months, the Abracadabra protocol has been able to develop several new v3 cauldrons that have been added to our lineup.

We introduced peg stability mechanisms to these CDPs thanks to variable interest rates, which gets activated in times of extreme market conditions. In case of peg issues, for example, the rate can be adjusted to help incentivizing users to close open positions.

Today these mechanisms will be used to help bring MIM back to peg.

Effective immediately, our yvDAI cauldron interest rate has been increased from 0% to 1% yearly. This increase in yvdai interest rate can continue in the next days, together with possible increases on Stargate USDC and USDT cauldrons’ interest rates, depending on the peg.

All updates will be properly communicated through our main official channels.

Given the low performance of the yvdai cauldron, we recommend anyone with an open position to close it and deleverage it at your earliest convenience.

You can find a tutorial on how to deleverage Abracadabra positions here.

Here is also a video that will show you the two ways of closing a leveraged position: either slide both sliders to the right or use the close position button, whatever you prefer!

Do not worry if the amount of yvDAI displayed by the UI is lower than what you would expect, the difference between that amount and what your position is worth will be found as “MIM in degenbox” which can be later withdrawn to the wallet. This is caused by the extreme volatility the chain and the liquidity pools are currently experiencing.

Read more about this here.

Lastly, remember that closing a position when MIM trades below one dollar produces an instant profit, while simultaneously helping the protocol obtain its peg. The user is buying cheap MIM to repay the debt, and at the same time it is rebalancing the MIM-3pool.

Next Steps

As previously mentioned, this set of increase in interest rates aims to act as a peg stability mechanism that will bring balance to the main MIM-3pool on curve finance. As more people close their positions, an increasing amount of MIM leaves the MIM3pool, balancing the ratio between 3crvs and MIM, and therefore its peg.

We will continue using the tools we developed to make sure that the system keeps acting as it was designed to do. MIM is an overcollateralised stablecoin, backed by a basket of diversified assets, which you can monitor here.

If you have more questions about this, do not hesitate reaching out to our team members and moderators on Discord.

1 Like

Awesome stuff!!! :man_mage: