SAIP #54.4: Add Oracle Price Tracking for sdeUSD Cauldron
Tldr: This proposal aims at updating the price feed for the sdeUSD cauldron from the currently used Chainlink DAI/USD, to Chainlink’s deUSD price feed. This change is justified by the robust risk mitigation provided by constant sdeUSD price tracking rather than utilizing the oracle pricing of DAI.
Introduction:
Given the continued high interest of the sdeUSD cauldron and the DAO’s ongoing strategy to provide secure cauldron markets, there is the need to properly evaluate the price of the sdeUSD asset, rather than relying on the price of DAI. Currently, the price of sdeUSD on the Elixir network is determined by utilizing Chainlink’s DAI/USD oracle on the Ethereum mainnet. This will be updated using the price of sdeUSD on Chianlink, which looks at the price of deUSD across 4 data sources to constantly update the price. This change will allow the DAO to correctly price the collateral deposited in the sdeUSD cauldron.
Proposed Changes:
Currently, the price of the underlying deUSD when depositing collateral in the sdeUSD cauldron is priced at 1 DAI. There is a need to update this to properly represent the price of sdeUSD as the price of sdeUSD as determined by the Chainlink oracle. The oracle will look at, analyze and aggregate on-chain data from multiple sources providing the most accurate price possible for the underlying sdeUSD.
Risk Mitigation:
- There is a lower risk for price manipulation and single points of failure by using a decentralized oracle that correctly tracks the price of sdeUSD.
- Prevents Abracadabra DAO from acquiring bad debt and prevents collateral deposits made with incorrect price, which causes inaccurate executions of MIM minting and liquidations.
Technology:
This proposal would change the implementation of the oracle used by the cauldron. The cauldron itself would not be modified. The oracle would be updated to: [0x471a6299C027Bd81ed4D66069dc510Bd0569f4F8
(EACAggregatorProxy | Address 0x471a6299C027Bd81ed4D66069dc510Bd0569f4F8 | Etherscan). By coordinating the Chainlink deUSD/USD price feed with the ratio of sdeUSD/deUSD, the oracle can correctly calculate the price of sdeUSD/USD.
Conclusion:
This update to properly track the price of sdeUSD oracle rather than relying on the price determination of DAI/USD through Chainlink ensures price transparency and safety for both the Abracadabra cauldron liquidity providers, as well as for the Abracadabra DAO. By utilizing the correct price of sdeUSD, the cauldron will allow to properly perform on-chain actions and prevent the DAO from taking on bad debt through any possible price manipulation of DAI/USD. This strategic adjustment allows Abracadabra to further capitalize on the success of sdeUSD collateral and strengthen the partnership between Abracadabra and the Elixir network.
Next Steps:
The current proposal will remain as an SAIP for 48 hours, and then be moved to voting.
The voting period will last 72 hours.
The snapshot vote will be linked here.