The current interest rate response functions have been deprecated since they stopped working properly with the introduction of the flat curves. The reason is that they were all observing price vs. target and acting accordingly. Since the price with the flat curve pools is on peg for a long time (until it’s not), the response mechanisms don’t work as expected.
There are some changes that could be done:
- build the response based on the pool in the flat curves (i.e. usdt vs uusd)
- have the YOU holders vote on the interest rate (like for kUSD)
This is an open discussion and the purpose is to find a solution which incentivises growth of activity and usage of the protocol.