Summary
In preparation for Notional’s upcoming quarterly roll occurring Friday, December 23rd at 8:00 PM EST, I propose to update some of the protocol’s governance parameters in order to increase capital efficiency across Notional’s markets. These changes are essential in order to facilitate ETH borrowing and optimize capital efficiency for WBTC markets.
AMM curves
Objective : Shift the interest rate curves upwards by increasing the anchor rates and making them flatter by increasing the scalar rates. These changes will accommodate higher ETH interest rates and facilitate borrowing for leveraged vault users.
- ETH: Increase the anchor rates from 3.0% to 4.5%. Increase the scalar rates from 45 to 60;
- WBTC: Increase the anchor rates from 1.0% to 1.5%. Increase the scalar rates from 66 to 75.
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 0.08 (0.3% interest rate);
- WBTC: Initialize the 6-month market at a proportion of 0.26 (0.1% interest rate).
Leverage thresholds
Objective: Update leverage thresholds to ~6% for USDC, DAI, and ETH. Update leverage thresholds to ~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 0.72 (3M) and 0.72 (6M);
- DAI: Set the leverage thresholds to 0.77 (3M), 0.77 (6M), 0.77 (1Y);
- USDC: Set the leverage thresholds to 0.77 (3M), 0.77 (6M), 0.77 (1Y);
- WBTC: Set the leverage thresholds to 0.87 (3M) and 0.87 (6M).