βœ… [RFC] Increase cache for the mUSD/BUSD Feeder Pool

Summary

The recent proposal to remove mUSD in the Feeder Pools from the Iron Bank was passed with MIP 23. The contracts to replace the integration are almost ready. However, the migration of both pools is not possible at the same time, because some mUSD is still lent out. Therefore I would like to propose to increase the cached amount to 20% (maximum) to reduce the interaction with the Iron Bank upon depositing into the mUSD/BUSD Feeder Pool.

Abstract

One Feeder Pool can be migrated to the dummy integration contract as specified in MIP 23. In the first step, this should be the mUSD/GUSD Feeder Pool, since this pool has a higher TVL.
For the second pool Feeder Pool (mUSD/BUSD) a migration is at the time not possible. Therefore an increase of the cache to 20% would limit the deposits into the Iron Bank and allow for cheaper transactions, while also increasing the interest rate in the Iron Bank for the borrower.

Eventually, the second feeder pool should migrate as well, once the loaned out amount is paid back.

Motivation

This RFC would help with the migration from the Iron Bank to the dummy integration contract. It would in effect lower the amount of mUSD in the Iron Bank, increase the borrowing APY and increase the pressure to repay the loaned amount. In addition, this would also decrease the interaction with the Iron Bank and allow for better a functioning mUSD/BUSD Feeder Pool.

Pros

  • Reduce the amount that is in the Iron Bank
  • Increase APY to make a repayment of the loaned amount more attractive

Cons

  • Probably none
1 Like

I see this as a very smart way to reduce feeder pool deposits on iron bank and incentivise mUSD repayment. Fully supportive, and well done to @Dimsome for coming up with this approach.

Thanks!

Also, I think we should add the other pool to add to this Proposal: set GUSD Feeder Pool cache to 20% as well. If the dummy integration contract is reviewed in a timely manner then we might not need it, if not, then this would ease the interactions with the Iron Bank as well in the meanwhile.

I don’t think this RFC is too controversial since we wanted to move from the Iron Bank away anyways, will be drafting the MCCP soon.