Summary:
This proposed change aims to switch the backing of the PEBL RToken from AAVE USDC to Savings Dai (sDai). By making this change, we intend to use a more decentralized finance (DeFi) native stablecoin that also provides yield to token holders.
Many thanks to @mattimost for the feedback
Abstract:
We propose to change the collateral backing of the RToken from AAVE USDC to Savings Dai (sDai). sDai is a stablecoin that not only maintains a stable value but also generates yield for its holders. This change will involve transitioning the existing collateral from AAVE USDC to sDai, ensuring that the stability and liquidity of the RToken are maintained throughout the process. The goal is to enhance the DeFi-native nature of the RToken and provide additional benefits to token holders through yield generation.
Problem Statement:
Currently, PEBL is planned to be backed by AAVE USDC, which, while stable, offers minimal yield to its holders. This setup does not fully leverage the advantages of decentralized finance (DeFi) protocols that can offer additional benefits such as yield. The lack of yield makes the RToken less attractive compared to other DeFi tokens that offer both stability and yield. Therefore, there is a need to switch to a collateral that not only maintains stability but also provides a yield to enhance the attractiveness and utility of PEBL
Rationale:
We propose using Savings Dai (sDai) as the new collateral backing for the RToken. sDai is a stablecoin that is inherently more aligned with the principles of DeFi and offers yield through the Dai Savings Rate (DSR). This change will:
- Align the RToken with DeFi-native principles by using a stablecoin that is widely recognized and trusted in the DeFi space.
- Provide additional value to RToken holders through yield generation.
- Maintain the stability and liquidity required for the RToken’s operations.
Alternate designs considered include maintaining the status quo with AAVE USDC or switching to other stablecoins like USDT or BUSD, but these options either did not offer yield, did not have ready made connectors or did not align as well with DeFi principles. The rationale is to provide a better overall package to PEBL holders while maintaining the token’s stability and functionality.
Risks:
- Volatility Risk: Although Dai is a stablecoin, any unforeseen issues with its stability could affect the RToken.
- Yield Variability: The yield from the Dai Savings Rate can fluctuate, which might affect the expected returns for RToken holders.
- Implementation Risk: Transitioning from AAVE USDC to sDai involves technical and operational risks, including the potential for smart contract vulnerabilities or errors during the transition process. Given what I’ve seen with other tokens, this risk is minimal.
Voting
- Yes, I support this collateral change
- No, I do not support this collateral change