This idea originally came from @arch, and it’s something implemented by MakerDAO called the MakerDAO PSM. It’s a bit different than my original plan for a “stability fund”.
This proposed solution would take significant pressure off of the rebalancing mechanism to maintain the peg. It’s quite simple, but powerful.
The stability fund would have the ability to mint bnUSD in exchange for whitelisted stable assets, and vice versa, sell stable assets in exchange for bnUSD and burn it. Within the ICON Ecosystem I’d propose IUSDT, IUSDC and USDS for now. We would institute a 0.5% fee controlled by governance. I propose we start with the following limits for now for tail-end risk protection (I.e orbit bridge is compromised)
- IUSDC: 2M
- USDS: 2M
This proposal essentially allows any approved stable asset to be used to mint bnUSD, making it easier to absorb spikes in demand or supply. This, coupled with the future feature of multi-collateral, will greatly increase the stability and revenue of the protocol.
From my understanding this should be fairly easy to develop and could potentially release prior to the Java migration/continues rewards if circumstances call for it and the DAO approves. Looking forward to thoughts and feedback.