Summary
This proposal aims to update the market rates and vault parameters across the Fluid platform to better align with current market dynamics and optimize asset utilization.
Proposal
The Instadapp team is proposing the following changes to the USDT, USDC & wstETH Rate Curve, and weETH vaults and interest rate configuration handler, the following adjustments will align with current market conditions and optimize asset utilization within the protocol.
USDT Market Rate Curve Adjustments
Current Rates:
- Utilization 0%: Rate 0%
- Utilization 93%: Rate 12%
- Utilization 100%: Rate 25%
Proposed Rate Curve Adjustment (preview):
- Utilization 0%: Rate 0%
- Utilization 93%: Rate 10%
- Utilization 100%: Rate 25%
USDC Market Rate Curve Adjustments
Current Rates:
- Utilization 0%: Rate 0%
- Utilization 93%: Rate 12%
- Utilization 100%: Rate 25%
Proposed Rate Curve Adjustment (preview):
- Utilization 0%: Rate 0%
- Utilization 93%: Rate 10%
- Utilization 100%: Rate 25%
wstETH Market Rate Curve Adjustments
Current Rates:
- Utilization 0%: Rate 0%
- Utilization 80%: Rate 5%
- Utilization 90%: Rate 10%
- Utilization 100%: Rate 100%
Proposed Rate Curve Adjustment (preview):
- Utilization 0%: Rate 0%
- Utilization 80%: Rate 4%
- Utilization 90%: Rate 10%
- Utilization 100%: Rate 100%
weETH/USDT Vault Parameters:
Current Limits:
- Borrowing Limit: 20M USDT
Proposed Limits:
- Borrowing Limit: 50M USDT
weETH/USDC Vault Parameters:
Current Limits:
- Borrowing Limit: 20M USDC
Proposed Limits:
- Borrowing Limit: 50M USDC
Deploy Interest Rates configuration handler
Currently, interest rates can be only updated through the governance and it takes at least 4 days to change the rates through the governance process excluding the time for drafting and reviewing the proposal itself.
However, we have witnessed that market sentiment sometimes changes very fast and Fluid was not able to react to the changes fast enough to offer the best conditions for the users. Instadapp team offers to deploy a configuration handler which will give the team multisig access to change interest rates bypassing the governance voting. This handler should have strict limits to avoid potential situations where the team can significantly change the conditions for Fluid users. The proposed limits are:
- The team can change the rates by not more than
- 20% once in 96 hours (eg if the borrowing rate is 10%, the team can update it in the range between 8-12%)
This configuration handler will allow it to be proactive in the interest rates management and it will reduce load on the governance for changing the rates frequently. In the future, the team will explore and develop an automated interest management system to avoid manual interactions unless required.
Reason
The proposed adjustments are designed to better reflect the current lending environment and economic conditions affecting Fluid markets.
Conclusion
This proposal updates the stablecoins market rates on the Fluid liquidity layer and applies changes to the Vault parameters, ensuring that the rates are competitive and reflective of the broader market conditions, thereby promoting a healthy balance between borrowers and lenders on the platform.