Summary
The Electronic Dollar(eUSD) is a fully asset-backed currency (“RToken”) created on the Reserve protocol. RTokens feature onchain asset-backing, revenue sharing, overcollateralization and mint/redemptions, governed by RSR stakers. eUSD, is censorship resistant and a safety-first stablecoin that brings together diversified, highly liquid backing with anti-bank run overcollateralization.
In this proposal the aim is to improve the yield profile in the eUSD collateral basket.
Current Basket:
25% Comp v2 USDT
25% Aave v3 USDC
25% Comp v3 USDC
25% Aave v2 USDT - 2% APY
Proposed Basket:
25% Comp v2 USDT
25% Aave v3 USDC
25% Comp v3 USDC
25% sDAI - 8% APY
Abstract
The proposed proposal, if enacted, would swap Aave v2 USDT for sDAI in the eUSD collateral basket.
Problem Statement
Currently the yield from the Aave v2 USDT part of the basket has dropped significantly in recent months.
Rationale
DAI Savings Rate:
The Dai Savings Rate (DSR) is a fundamental component of the Maker Protocol. Once locked into the DSR smart contract, DAI continuously accrues, based on a global system variable called the DSR. The DSR is a special module in the MakerDAO smart contract system that allows DAI holders to receive a share of the revenue earned by MakerDAO. The DSR revenue is generated through various mechanisms, such as stability fees.
Scalability should be another point of consideration for the governors. sDAI has significantly more liquidity depth than the Aave v2 USDT position; there is currently just shy of $2 billion in the DSR. With sDAI in the collateral basket, eUSD will be able to safely scale to a higher market cap without collateral asset liquidity concerns.
The other consideration is the minting cost, however, both Aave v2 USDT and sDAI have similar minting costs.
Risks
The risk lies in introducing a new asset(sDAI) into the eUSD collateral basket, however this concern is mitigated because this asset has been seen before in both hyUSD(mainnet) and USD3.
According to bluechip, DAI has a ‘B+’ rating, and is considered a highly-rated stablecoin, governors could potentially be lowering the risk profile of eUSD with the addition of DAI in the collateral asset.
By removing the Aave v2 USDT part of the basket and replacing it with sDAI, this will lead to an increase in the yield profile and scalability for eUSD without increasing the risk.
- Yes, I am for this proposal
- No, I am against this proposal
