Given the high demand of bnUSD we’re all experiencing I think now would be a good time to increase LTV to allow people to unlock their positions and also mint more bnUSD to soak up the demand.
I propose we increase LTV to 35%. If the peg flips in the other direction again, I would like to discuss whether or not it makes sense to lower LTV again. I’m not necessarily convinced that’s the case given that rebalancing takes care of this naturally.
Fully support this, nothing to add.
Are there any downsides to making it go back to 35% again? More demand for bnusd sounds good to me
Ah, the demand is already there. That’s why bnUSD is consistently above $1 and reverse-rebalancing is occurring. So this would allow people to mint more bnUSD.
The downside is that the market could correct itself when Binance opens deposits, then maybe we’d have too much bnUSD in circulation again. But I’m not necessarily convinced that’s a huge issue
I support this and was already considering bringing up the discussion anyway.
I support too👍 the demand for bnusd will be increased with the CPS and more token listing thanks to btp
Sounds good! Thanks Scott! Good idea
Excellent! Let’s go for it!
100% agree here also don’t think there’s any reason to lower it at a later date.
Agree to increase LTV to 35%
Could we do an incremental walk up to 35% vs straight to it. Use metrics to show its working or not vs jump 10 points only to rebalance back down. For example, maybe up 3% at a time (starting @ 28%) with data driven hurdles triggering follow on increases and a cap @ 40% vs straight to 35%.
Im fine to increase it more slowly, though I think 3% at a time is a little too slow given the situation. My primary goal is to allow people to unlock collateral at a higher LTV if they are able to.
As for data-driven results, any specific suggestions there? I’d look at the bnUSD peg and perhaps the amount of rebalancing taking place.
The peg seems to be stable again now. I think the proposed LTV increase is too much. With that we risk bnUSD to be off peg again like it was in the past.
Aligned. 3 may be too little, 10 too much. Avg Peg over period, loan uptake maybe ratio one to another… Are there current metrics used or emerging? Overall, the idea is more of an (incremental) approach vs one shot. Thanks
Completely agree, as it can be unnerving to watch loan amount increase, liquidation price come up, and collateral being locked at the same time. Obviously best practice is to have ICX on the sideline, but based on talk around the socials I don’t think everyone does that.
It has seemed to stabilize. Maybe increase 5%, then the other 5% if needed?
Personally I think the LTV should have just been left at 35% to begin with so, despite the peg stabilizing, I’m still for this change.
I understand the reasoning behind lowering it, but I feel like the problem with rebalancing continues to be one of misunderstanding, rather than a mechanical one. Most people are concerned about adjusting the LTV because of a fear of rebalancing, but the rebalancing process is generally actually useful and has yielded positive results for me over the long term and I suspect that is true for most people by design.
Besides, 35% LTV is on par with similar products in the space!
Back to below par and negative rebalancing. Feels like we wait on this vs add more bnusd to ecosystem.
This would still allow people to unlock collateral, sell ICX for bnUSD, then payoff debt, which actually increases demand for circulating bnUSD.
Either way, definitely wish we could have just moved faster. A consequence of decentralized governance.
Overall, raising LTV isn’t all that bad of an idea anyway imo. Trying to generally make it a better experience for borrowers, and higher LTV is better for them
Average rebalance purchase price was somehow $1.58 even though site was showing mid 1.20’s on sicx bnusd post snapshot. Todays rebalance sales were $1.35 average. I’m not sure how many are going to be selling at a loss once their collateral unlocks assuming they were not close to 25% LTV at snapshot. The 30% LTV may be the right thing, but it’s reactionary at the moment for a red herring triggered by CEX deposit closures and balanced selling.