COMPREHENSIVE VIRES PARTIAL RESET PROPOSAL BY mr_hedgie_wa

COMPREHENSIVE VIRES PARTIAL RESET PROPOSAL

By https://twitter.com/mr_hedgie_wa

Ultimate goal: Restore liquidity and make users whole over time Strategies: 1) Reduce interest payment by Sasha 2) Restore healthy markets on Vires 3) Vest USDN without depeg and maintain long-term health

Thanks to

@viresfinance

, we had good discussion with

@sasha35625

in today’s AMA. After which - we got two good stats on USDC and USDT markets. Pay attention to the 10k bracket.

My initiative (A) to reset balances above 10k (or even 8k, if it serves better). There will be 4,553 USDC users under 10k. Together with 594 users over 10k, remaining USDC balance after reset will be 594 x 10,000 + 4,614,515 = 10m.

There will be 2,510 USDT users under 10k. Together with 256 users over 10k, remaining USDT balance after reset will be 256 x 10,000 + 4,043,148 = 6.6m.

The figures may not be complete, but resetting balances above 10k, or say 8k if it makes more sense, can trim down the USDC and USDT markets to 20m TVL (which is what Sasha said he targeted if the markets were rebuilt).

Initiative (B) will lower the APY. Sasha is bleeding 100k daily on interests. After cutting borrowings to 20m, the community all understand we should lower MAX APY to ~10%, to make it sustainable. That’d reduce Sasha daily interest to <10k daily, which is more manageable.

Back to the stats, in 20m markets, a 1m repayment can lower utilization to 95% already. It may also be possible to further trim adaptive withdrawal limits to $500 daily for the lowest bracket, to allow liquidity to last longer.

USDN vesting, will be available to total 850 users (for 10k reset), as shown in the stats. These users will have two streams of withdrawal: (1) guaranteed USDN vesting; and (2) USDC/T market liquidity.

As we have seen in VIP-26, people dump USDN relentlessly, for example one wallet was able to dump 260k USDN daily (100x more than they could withdraw prior), which contributed to the depeg. This is vastly unfair to the other users, and harm the system.

We can introduce adaptive vesting (cap and floor) for these 850 users, e.g. $100 daily cap = 85,000 USDN in selling pressure daily. Team can find out the best figure. Do remember, these users already received 5% liquidation bonus, and now have additional stream withdrawal.

This buys the time for Sasha to tackle the USDC/T markets. Users chime in on Telegram that they would stay with 10% APY, which is key because they have a reason to stay. If converted to USDN, they don’t have a reason to stay (so they sell USDN).

After a while, after maintaining USDN peg and gradual vesting, users may choose to convert their balance under 8k into USDN, with limited time bonus. This gives users an option, and avoid a mass exodus of small accounts under the FULL RESET (to discuss below).

The above measures can: 1) Provide users with option and streams of withdrawal. 2) Restore confidence and greatly reduce selling pressure of USDN. 3) Keep USDC and USDT markets alive, which is best testimonial for the resilience of WAVES system.

Why a FULL RESET will cause great harm: (1) You essentially killed USDC and USDT markets. Imagine you treated your ex badly and word got out, no matter how you vouch you are a perfectly good guy, you ain’t getting any girls no more.

(2) Mass exodus will kill USDN When all the small accounts got their first vested USDN (there will be 5000 users), mass exodus will depeg USDN. Apply adaptive limit to 850 users, you will have a more manageable vesting, rather than all 5000 users rushing out at once.

As per our conversation,

@sasha35625

, there is a lot of overlap and similarity in our proposals. I do believe the stats paints a picture, that my middle-ground proposal is very much manageable (<10k daily interest), while gives two great benefits:

1.Installing trust and confidence through real revitalization of USDC and USDT pools. With 20m markets, a repayment of 1m lowers utilization to 95%. Bulk repayment of 2-5m, can already lead to a great period of calm just like Jul-Aug, everyone can withdraw everyday.

2.More stable USDN. Adaptive vesting schedule can mitigate USDN depeg. This corrects VIP-26 inadvertently favoring whales (who could withdraw a lot more than before). Small users also have a reason to stay (~10% APY is good enough to stay in current environment).

I believe my proposal can fulfill your stated goal “Make all users whole > Get back to building > Sustain the ecosystem” in an even better way. The support in Telegram is great testimonial. - END –

THANKS TO https://twitter.com/mr_hedgie_wa FOR WRITING THE PROPOSAL

1 Like

the explicative images can be found on the twitter post of the user:

As illustration:

  1. USDN Vesting: 850 users x $100 vesting cap = 85,000 USDN daily.
  2. ~20m USDC/USDT market = say 100k repayment daily, will equal to 3m monthly, and in half a year 18m can be repaid (interest expenses won’t eat much into the repayment).

Under these two repayment schedules, each day Sasha has only to deal with about 200k USDN selling, which is much lower than previous 1m USDN daily under VIP-26.

1 Like

what are the differences between your proposal and the vip 28 the team did and has to be voted from tomorrow?

Ditto