[Closed] Remove DAI from the basket (for now)

Summary:

This discussion revolves around removing DAI from the basket, until such time as it either returns to peg, or the mUSD AMM is upgraded to support this sort of price action

Abstract:

Remove DAI from the basket. This would save gas across the board. DAI could be replaced with sUSD immediately.

Motivation:

Given our current AMM etc, DAI simply provides no value at all. This bAsset causes gas cost increase of roughly 10-20k per transaction, and 300k on proportional redemption, and 20k on savings contract deposit

Pros:

  • Lower gas costs across the whole suite
  • Make space for bAssets that contribute more to swap volume (for example sUSD and others)

Cons:

  • Remove the possibility of getting swap fees from DAI should it deviate from beg
2 Likes

I agree with this as a temporary measure.
(until the AMM is implemented)

The mUSD has Pickle-like ability to provide arbitrage of StableCoin in Basket, bringing the price closer to $1.
Also we can earn SwapFee.

Therefore, a less stable currency is good as an alternative, which fluctuates more than 0.060 %(swap fee) up or down a dollar.

I think option is PAX, sUSD, GUSD and HUSD.

2 Likes

Given that sUSD has already been proposed and will likely be added this week if price continues to stabilise, it is the short term option.

I’m in agreement with this proposal - I do not see DAI going below peg, and so far it has just been “dead weight” in the basket from a swap fees and risk management perspective.

Once the new AMM is up, this will no longer be an issue, so we will see DAI back in the mUSD basket in the near future. Until then I’d like to harvest sUSD’s volatility so we can boost the SAVE APY.

One question I do have about finalising sUSD inclusion is its weight. We do not have to set the weight of sUSD at the same level as other bAssets (currently 55%). I feel like it should be somewhere lower, to compensate for the higher risk of peg loss I feel is associated with sUSD. Somewhere between 20-40% basket max weight would be my opinion on an optimal number for where this max weight should be set.

2 Likes

Yeah, keen to set it at 40%… there has not been a vote yet for that.

If there are no objections, I would prefer that this proposal should be vote on at the next timing.

(Same timing as wind down)

I am in favour of temporarily removing DAI from the basket since it’s always empty anyway

Since around the second week of October, the sUSD has been stable around $1.

We can determine that the conditions have already been met.

1 Like

Since sUSD has now been added to the basket, the idea to replace is no longer valid.

I therefore think we should wait and hold off a bit longer on this. DAI has reached 1$ on and off in the last couple of days…we might be seeing some stabilization soon, given there is a ton of new onboarding collaterals in the making from Maker.

Good idea maybe let’s wait and see for a little while longer. This discussion can still stand.

1 Like

Actually it is still trending around $1.01

True that the idea to replace it is no longer valid but I believe the proposal to remove it still is. I don’t see any reason not to remove now and add back in if/when stabilisation happens or new AMM is introduced.

The vote to add stablecoins in a new vault for 0% stability fee is currently undergoing. I believe this will set the peg to stabilize…

If we start the vote now, it will co-incide with the MakerDAO vote. If we could at least wait for the results from that vote, and decide for the next round of mStable votes, we should have an accurate measure if it’s necessary or not imho.

1 Like

Until an incentive system to keep a minimum amount of DAI in the basket is created then it makes sense to remove it for overall gas improvements.

That said, I don’t think gas optimisations are as important as incentive improvements which will ensure minimum liquidity in baskets because you’re still at the mercy of the gas fee market.

Attracting a user base making high value trades is a better way of ensuring the product isn’t priced out of the market than gas optimisation.

Min baskets also mean more pairs which means more arb!
MOAR PEARS :pear::pear::pear::pear::pear::pear:

4 Likes

Oh my gosh, I love this! :laughing:

1 Like

Governors voted in favour of temporarily removing DAI from the mUSD basket.

DAI is now on a trend towards maintaining peg, but this is being watched closely to see if it is still necessary.