bnUSD Savings Rate & Real World Assets, can’t wait for the upgrade to take effect.
Currently, bnUSD is underutilized to the point where sICX cannot be purchased.
The reliability of bnUSD needs to be increased.
You can’t buy sICX with bnUSD, and you can’t change it to IUSDC because you don’t have stable fund funds.
Before applying the bnUSD Savings Rate & Real World Assets upgrade, I think you need to activate the previously proven ‘Rebalancing’ function or modify the ‘Redmepitons’ function to match the $1 peg, even if only for a moment.
Redemptions function has been on main net for quite some time, and the DAO can adjust the function as-needed. It’s currently set to 0.90, but can be raised to whatever you think is best. Personally, I don’t have a strong opinion, and would prefer to keep redemptions as a key support function rather than something we regularly depend on.
Having said that, if you or another community member would like to propose an increase in the redemption value, you have the ability to do so. I’ll share a screenshot below of how to set it up on the UI. I’m not sure how I’d vote, personally. Something I need to think about.
To share my personal opinion, I don’t really agree with many of your points. Specifically, I believe that waiting for the savings rate and RWA backing is a viable strategy. I don’t see the current situation leading to “trust is broken”. I think a bigger risk is possible frustration among current borrowers from redemptions. I think that 0.90 is perhaps too low, but wouldn’t want to go much higher.
Our users / DAO Voters know the DAO can change this parameter at any time to bring it back to close to $1 if all else fails. My perspective is to be patient and wait for a solution that has less impact on our existing userbase.
*Side-note - @hetfly in the UI, how should somebody enter “5%”. Would it be 5, 0.05, or 5 with a bunch of 0’s (i.e. 18 decimal notation)?
I agree that something needs to be done to bring bnUSD back to the peg. The bnUSD savings rate and opportunity to invest in RWAs seem to be the right steps, and we are getting there, but it will take time and I am open to any other ideas as well.
For our team the biggest issue right now is that we need to pay salaries out of CPS grant funds that we receive, so it is a bit discouraging to have to accept a 5% loss right out of the gate in the conversion. But realistically, I don’t have to think of it that way. The fact is that right now bnUSD is worth less than a Dollar and we are getting paid for our work, so I can be pretty happy with that perspective. I can also attempt to covert when ICX is down so that I can get a bit of a boost from ICX price appreciation on the ICX step when going from bnUSD → ICX → USD. It is a bit of labor to manage those steps, but not too bad. I can wait for the deployment of the improvements we are considering.
In the interim, should we consider increasing the redemptions threshold? So there will be an incentive to trigger rebalancing when bnUSD price is higher than $0.90 worth of sICX? Previously, when we had set the threshold higher, we saw that falling ICX price could result in frequent rebalancing, this would result in borrower LTV going up, causing liquidations, and all of this was happening faster than we expected. The system stayed solvent, but it put borrowers in a position of uncertainty, requiring them to be vigilant in case of a market drop to avoid catastrophic loss. So right now this mechanism is a backup to prevent failure of Balanced as a platform, and to be clear, we probably have this to thank for the remarkable resilience of Balanced through three major market drops, but it is too traumatic for us as investors to have it kicking in regularly.
To sum up my perspective on this, the current situation is frustrating, but we have a plan going forward. People can have confidence in the resilience of Balanced given its track record. Regarding pulling up the price towards the peg sooner by some other means, I am open to suggestions, but from our experience it has been uncontrolled rebalancing that has been the most traumatic for our users, and it has had the biggest impact on community trust, so we should adjust it carefully, if at all.
I agree, I think we should get our peg to $1 sooner than later. I see $ICX and $BALN as teammates and would think ICON would want a dollar peg for its ecosystem. But I’m sure they have Balanced best interest at hand but wish it seemed like Balanced was a priority. It seems like we have not had many positives and no growth since the hack. I would have rather seen a bolster of energy into Balanced instead of a slight fizzle. Still here for the long term!
Appreciate the detailed thoughts @dbrehmer and I do echo your opinion. I am open to it, but not willing to lead the charge. I would evaluate a vote proposed by somebody else at the time of proposal. I think the absolute highest I’d be willing to go in terms of a redemption value would be 95 cents, but would certainly consider it carefully for the reasons you mentioned.
Ever since the hack, the DAO’s monthly performance has dropped to $2000. Prior to the hack the monthly performance was around $9000. The main income has always been the sICX/bnUSD pool’s trading fee. Without a stable peg the fees are minimal.
Have you guys looked at the amount of bnUSD waiting to exit? It’s 600k+, and they’ve been waiting since June. Unless the savings rate is going to be dynamic (Higher total LTV- higher rate) I don’t see it having much benefit when the outlying bnUSD amount is so big.
Of course we could let the market itself figure it out, hoping that the price of ICX will rise enough that loan holders pay their loans back.
But really I only see rebalancing as a meaningful solution. Big supporter of the previous 2.5% limit.
Just to be clear, we’re talking about raising the redemption limit, not the reverse-rebalancing mechanism that you’re thinking of here. Redemption lowers your risk by selling some of your collateral for bnUSD and using it to repay your debt. It’s like a penalty-free liquidation that can occur only when bnUSD is x% below peg (currently set to 10%).
This is definitely a key point and I look forward to the peg returning to $1 for this reason, but I personally am still willing to wait for other initiatives to kick in. It’s not just the savings rate, but also the ongoing interest cost to borrowers that encourages them to buy bnUSD and repay debt.
Another idea is that large amount of sICX held in the DAO Fund, we could use that for more POL through selling half of it for bnUSD and LPing. That would at least add some temporary buying pressure to bnUSD while other things are worked out.
It’s kind of ridiculous we are planning on, again devaluing BALN by using it to entice people to pay off their loans. BALN is down 300 percent from ICX in the last 14 months. Painful to see ICX recover and BALN on life support. Maybe we need to consider just using an actual stable clan for ICON as Balanced USD has not lived up to its name and continues to drag resources from BALN investors. ICON, who has much bigger pockets will be the winner because of Balanced. BALN will continue to be devalued trying to attain a 1 dollar peg.
Through our three downturns on Balanced when users were liquidated, we always have given them their money back out of Balanced reserves. Now, some could argue on here that was for the users benefit, it was also for ICON’s benefit. It was the users benefit and ICONs benefit but it negatively impacted Balanced balance sheet each time we gave back money.
We have broken our DAOs bank while keeping the image of ICON clean. Which isn’t a bad thing, but we work in harmony together.
I actually agree we did the right thing as I voted for reimbursements, but a large percentage of voter votes no as they believed no other DAO would “gift back” users losses.
ICON has also helped Balanced in a lot of ways for free in different areas, let me tell you, a lot, and thank you! So I like how we work together.
I’m saying we need ICONs help now with ideas of how to stabilize “ICON’s stable coin”. Without making BALN investors inflate their currency that has already been abysmal.
It’s time to ask ICON for help to stabilize BUSD as it it used all over their ecosystem with grants and payments and workers aren’t happy being paid 94 cents on the dollar. We can do better for ICON’s workers but we need a grant, help, support for “Balanced USD” to remain one dollar without printing BALN to put bandaids over issues. We need a true fix.
How are things coming along? Price appreciation doesn’t seem to be motivating enough for borrowers to pay back their loans.
I am getting a bit uneasy with the situation as the market seems to have taken a serious upturn recently. This is where the main income for the DAO is supposed to come from.
As I said, there’s about 600k-700k bnUSD waiting for exit and for some reason they seem okay with waiting.
Stability fund is currently capped at 250k USDC / 100k BUSD, of which latter will cease redemptions in February I believe.
Balanced Savings Rate initial draft implementation is coming along well. Before we really go full swing on trying to get the peg back, I want to see access to better stablecoins. As you pointed out, the only options right now are IUSDC from Orbit Bridge and BUSD from ICON Bridge.
BUSD is a stablecoin that’s getting retired over time, IUSDC is through a legacy bridge. I know that ICON is building a connection to Cosmos Ecosystem, which has its own native USDC issued on Noble, and Avalanche which has native USDC. Once those are up and we have clear access to USDC it’ll be good timing to go full-steam ahead trying to get the peg back.