Interest rate response functions open discussion

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.


How about YOU holders vote on the interest rate range first(i.e. 5%~8%), then the protocol response based on the pool in the flat curves (i.e. usdt vs uusd) within the range automatically?When the rate has been at the lowest or highest rate for a fixed length of time, then vote again.

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So,what’s up now? Can we rebalance the rate manually first? Then implement the automatically Mechanism later?

we’re drafting a YIP for this matter, but it’s not an easy discussion.

I think in a first phase it’s best to adapt them manually and see the resulting effect. Then in can be moved to be automatic again.

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If we implement the Interest rate response functions, the Saving pool of uUSD, uBTC and uXTZ need to change from long-term mode to normal mode.
Because the bailout function is no longer useful, then the stability of TVL in the Saving pool is meaningless to the system. The only purpose of the Saving pool is to help the synthetic assets peg, that is, to help the CFMM pool to keep rebalancing. And this requires the Saving pool is high liquid, can be through the two sides of the yield difference to guide the flow of liquidity in the Saving pool and CFMM pool back and forth. And the current Long-term model hinders the timeliness of synthetic assets flows.
At the same time, normal mode Saving pool have a lower APR. That means it can attract more uXXX tokens with the same mount of rewards .