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