Summary
In preparation for Notional’s upcoming quarterly roll occurring Sunday, September 24th at 8:00 PM EST we propose to update some of the protocol’s governance parameters in order to increase capital efficiency across Notional’s markets. These changes will be important in order to facilitate borrowing activity in the stablecoin and ETH markets in anticipation of the launch of strategy vaults in Q4.
AMM curves
Objective: Enable borrow trades with lower slippage. More specifically, we propose to shift the interest rate curves upwards by increasing the anchor rates and making them flatter by increasing the scalar rates. These changes will make more of the nToken liquidity tradable which is good for both borrowers and liquidity providers.
- ETH: Increase the anchor rates from 1% to 3.0%. Increase the scalar rates from 39 to 50.
- DAI: Increase the anchor rates from 1% to 3.5%. Increase the scalar rates from 33 to 48 (3M), 33 to 47 (6M), and 31 to 45 (1Y).
- USDC: Increase the anchor rates from 1% to 3.5%. Increase the scalar rates from 33 to 48 (3M), 33 to 47 (6M), and 31 to 45 (1Y).
- WBTC: Increase the anchor rates from 0.5% to 1%. Increase the scalar rates from 46 to 66.
Initial proportions
Objective: Initialize new 6-month markets at proportions in line with current variable rates.
- ETH: Initialize the 6-month market at a proportion of 0.22 (0.5% interest rate)
- WBTC: Initialize the 6-month market at a proportion of 0.42 (0.5% interest rate)
Deposit shares
Objective: Allocate slightly more capital to the 3 month markets as we expect more activity in shorter-term maturities due to the launch of strategy vaults.
- ETH: Change the deposit shares from 50% (3 Month) and 50% (6 Month) to 55% (3 Month) and 45% (6 Month).
- WBTC: Change the deposit shares from 50% (3 Month) and 50% (6 Month) to 55% (3 Month) and 45% (6 Month).
Leverage thresholds
Objective: Update leverage thresholds to ~7% for USDC and DAI, ~6.5% for ETH, and ~4% for WBTC. If rates are above these levels any incoming liquidity will be lent. Leverage thresholds also aim to ensure that nToken accounts never become undercollateralized by providing liquidity to individual liquidity pools at leverage ratios that are too high.
- ETH : Set the leverage thresholds to 0.86 (3M) and 0.86 (6M);
- DAI: Set the leverage thresholds to 0.84 (3M), 0.84 (6M), 0.84 (1Y)
- USDC: Set the leverage thresholds to 0.84 (3M), 0.84 (6M), 0.84 (1Y)
- WBTC: Set the leverage thresholds to 0.88 (3M) and 0.88 (6M).