In light of recent events, I’d like to aggregate several community ideas from several different threads onto one thread to discuss next steps.
Ideas were mostly from @arch @Ken_M @AwaxJago and @Uglyrage. Perhaps I missed some, didn’t do a deep dive into the history of the forum, just operating off memory.
Overall, to enhance the current rebalancing mechanism, there are a few key features that were discussed:
1.) Rate limiting over time periods - only a certain amount of bnUSD should be able to be minted/burned through rebalancing over a certain time frame.
2.) Asymmetric Peg - Reverse Rebalancing does not need to be the same as regular rebalancing. In fact, it should likely be set at such a high level that it would be impossible to push somebody into liquidation. Based on liquidation LTV, this can be implied with some simple math.
3.) Organizing Borrowers into a list sorted by LTV, then only rebalancing the highest LTV accounts - This is from Liquity.org, our closest comp from ETH ecosystem. I’m on the fence as to whether or not this is better than evenly spreading across all accounts. They don’t really have this option since ETH is so expensive. Of course, this would only apply to regular rebalancing, not reverse. Liquity, fwiw, has no reverse rebalancing at all. Their LUSD and climb to any height above $1.
These ideas all came from the community, myself included. If anybody has any other thoughts, please share on the thread. The goal is to make the borrower experience on Balanced as good as possible without sacrificing too much of bnUSD stability.