From mStable protocolDAO
A number of users in our channels have highlighted an issue with mint/swap/redeem. When trying to swap ‘out’ sUSD, and you will get an error “Error during estimation execution reverted: There is not enough liquidity available to redeem”.
This is due to Aave not having enough available sUSD to withdraw from its lending market: https://app.aave.com/markets.
The mUSD cache keeps a certain proportion of each bAsset in raw form (e.g. sUSD, not on Aave), to make mint/swap/redeem cheaper with that asset. When the cache goes to 0, it tries to reset itself to x% of total supply (in this case $1.6m USD) in raw sUSD by redeeming asUSD (read more here). There is not enough available liquidity to do this at the moment on Aave.
This is nothing to be concerned about and all funds are safe. AAVE are planning to disable borrowing, so this will mean that loans gradually get repaid and liquidity frees up.
In the short term we propose a significant reduction to the size of our cache size so that most withdrawals are unblocked.
Setting the cache to 2% would free it up and allow it to operate under relatively normal circumstances, keeping between 0-740k USD in the cache at any one time.
Proposal is currently open
Due to the urgency and importance of this protocol change, we have created a flash proposal on our snapshot page that can be viewed here. At time of posting it is still live, and governors are able to signal their votes. Those who are opinionated on this should signal asap as the vote window will close soon. [https://snapshot.page/#/mstable/proposal/Qmd6tUsKKPEjAJX2yRdgzm5LdeeM5ZYWQDtYP7JxK6CCzs].
We are aware that this proposal has circumvented the standard governance process, and has not been taken through the normal progression of discussion on discord and the forum before heading to vote. We have deemed this vote to be a relatively uncontentious one, and will endeavour to improve these processes going forward to improve levels of governance participation. Those with serious reservations regarding the proposed change to the cache should signal either in this forum post or contact the protocolDAO’s representative directly.