ℓPIP: Reduce the Pledge-Ratio to reduce the ℓUSD value according to the current peg

Let’s discuss the reduction of the target pratio to 400 in a first step to recover peg. This should allow more users to claim rewards and build more ℓUSD to fight the current USD offset.

What’s your opinion about it. Let’s discuss

Best regards!

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P Ratio ‘amnesty’ to allow users to recover their positions…
Time frame?

Wouldn’t call it “amnesty”. I see no reason to decrease the lower liquidation bound at 200. There are arguments to move the upper bound down. The current amount of over collateralization seems to be to high to hold the desired ℓUSD peg. Therefore it should be appropriate to lower the target pledge ratio until we reach the 1$ = 1ℓUSD, which should be the timeframe before we go back to 500.

Please raise your concerns, if any!

Upper bound amnesty, its a reference term. Don’t mean to lower the liquidation level

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I think this is great idea and the sooner it’s implemented the better.

As well as the two main benefits PHO mentions above, in my opinion it will also:

  1. Keep users more engaged with the Linear builder.
  2. Use the Linear exchange more, with the additional lUSD they’ve built
  3. It will reduce liquidations (or certainly the amount of tokens lost in liquidation). This could help retain users for the longer term. Because although liquidations are essential for the health of the ecosystem, it could often lead to frustration for the investor and they may leave us altogether.
  4. I am sure it will attract more investment from existing users AND new investment (if marketed!)

I honestly think it would give Linear a new lease of life.

3 Likes

Dear Linear Community,

With reference to the discussion of lowering of the P-ratio.

After internal discussion within the core team, we propose the following, initial changes, to the protocol:

a) P-ratio to build / claim rewards

Reduce from 500 → 450

Allows users to claim rewards and build ℓUSD at a lower P-ratio, thus increasing the amount of ℓUSD in circulation.

b) P-ratio to remove liquidation marking

Reduce from 500 → 400

Allows users to restore their P-ratio and unmark accounts at a lowered ℓUSD amount.

If a user’s account has been marked (P-ratio < 200) and their P-ratio is restored to above 400 but below 450 (400 < P-ratio < 450). User will no longer be marked for liquidation, but will not be able to claim weekly rewards.

c) P-ratio to mark account for liquidation

Keep liquidation marking at 200

Remains as is to ensure the healthiness of the protocol.

d) Liquidation delay time

Reduce from 72-hour to 48-hour time frame.

Marked stakers will have a 48-hour time frame to deposit additional LINA or burn ℓUSD to return their account to above a 400 P-ratio. If the P-ratio of the marked account fails to return to above 400 within the 48-hour time frame, the account would be subject to liquidation.

Conclusion

We believe the above proposal aligns with the general sentiment in the Linear DAO and trust that neither of the above proposed changes will have detrimental affect on the healthiness of the protocol (since liquidation threshold stays the same) but rather allow users to claim rewards at a lower P-ratio and build more ℓUSD for the same amount of collateral. We also believe it will have a secondary affect on the ℓUSD peg, whereby the buy pressure from the need to restore P-ratio has been lowered.

Provided we can reach consensus we will post the ℓIP to Snapshot early to mid next week.

After successful vote, we estimate 3-4 weeks for implementation.

/Bowser and The Linear Finance Team

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I think this proposal will be a great step forward. Although, may I ask what the thinking is behind now having two high end pratio targets?

I’ve got 2 slight concerns.

  1. Does it overcomplicate the ‘system’ for new investors?
  2. From personal experience, when you’ve been liquidated at least there has been the silver lining that you can once again start claiming your rewards and start building again immediately.
    With this proposal, you will be liquidated up to the 400 pratio level and still wont be able to claim any rewards. Unless, of course, you have the funds to purchase lUSD to burn, but that increases the buy pressure again.

Your thoughts on this would be greatly appreciated!

2 Likes

Hey marshgrant,

Appreciate your thoughts and feedback!

  1. While we do understand that it adds another layer of complexity we trust the community will absorb it fairly easy and user guides will be published.

  2. Point noted, and while some buy pressure still exist it will indeed be lower. We are proposing the 400 and 450 levels as a first measure and to “test waters”, once we see the response we can always revisit should need be. Stated simply, the 450 vs a lower P-ratio to claim is a way of implementing protocol updates in a conservative manner. Going forward it will always be easier to implement “looser” requirements than having to go the opposite direction and re-implement stricter requirements.

/Bowser

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Hi,

Thank you so much for taking the time to respond to my thoughts.

I fully appreciate what you’re saying, but I’m still of the opinion that one simple pratio target would be the best way forward.

Even if that means the target for liquidation is increased to 450, to align with the proposed target for claiming rewards and building.

Being liquidated to 400 and not being able to do anything, sort of leaves you in no man’s land.

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The split of the targets could bring more flexibility in the future and shouldn’t be to complicated for the users. I think it’s a good idea to implement it in the first place, because maybe this could be helpful if there is not the desirable effect by the first adjustment. With this we can reduce the liquidations and therefore demand on lUSD without loosing a high target of overcollateralization for claiming users. This is well thought by the team in my opinion.

2 Likes

I’m in support of this proposal, I think it will be a positive addition to the protocol with little downside. It sends out a good message that we are being proactive in the management of certain current issues, namely peg of LUSD the high ratio of poorly maintained accounts with low p-ratio that are negtively affecting the health of Linear Finance.

3 Likes

I’ve read the whole thread, I also agree with what has been said and the proposal from the team, I’ll definitely vote for it.

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yes, full agreement. need to get people unlocked and using the protocol. need to be able to build LUSD and bring down the peg off-exchange. let’s do this

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The ℓIP has been posted to Snapshot!

https://snapshot.org/#/lineardao.eth/proposal/0xfc3570209ce0ca34402372cc1d3c3879bc9981914e2e247ba345cd3470809fb9

3 Likes