Active management of LTV

Meta-Governance
#1

Managing LTV around the circulating supply of bnUSD is pretty straight forward. We don’t need an extensive discussion every time we need to change LTV, we just need to follow the below principles:

  • If bnUSD is too cheap for too long → DAO must lower LTV to stop people from minting more bnUSD while also encouraging them to payback their debt
  • If bnUSD is too expensive for too long → DAO must increase LTV to allow borrowers to mint more bnUSD

At some point, maybe we can make this algorithmic based on the amount of rebalancing occurring.

Borrower behavior needs to be actively managed in order to properly manage the supply and demand. Learn more about managing borrower behavior on this thread

BIP12: Lower LTV to 25%
#2

Could this be achieved through smart contract by monitoring rebalancing.

X amount rebalanced per hour/day/week ~ change y% TVL

#3

Correct me if I misspeak here, but a rebalance implies an absolute value of some deviation from the peg, not direction.

I think should record how well and what direction (above or below) the bnusd price tracks the underlying. We could sample it at the time rebalances happen, over time or find some other statistic that summarizes it well. Then we can adjust the interest rates accordingly.

I want to think about what’s easy and good to do in a smart contract, then could make a suggestion.

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Rebalancing, bnUSD supply and DAO Management