[IP] eUSD Emergency Collateral Updates

Summary

This proposal removes USDP from the emergency collateral, and adds pyUSD into the emergency collateral.

Current Emergency Collateral Backing:
USDC
USDT
USDP
DAI

Proposed Emergency Collateral Backing:
USDC
USDT
DAI
pyUSD

Abstract

The proposed proposal, if enacted, would remove USDP(Pax Dollar) from the emergency collateral, and add pyUSD(PayPal USD) into the emergency collateral.

The Emergency Collateral Backing is a separate basket of tokens used only in the case of a default of the primary collateral. The Emergency Collateral has a priority order, in the case of a default of the primary collateral, the first asset in the Emergency Collateral will be used to replace the faulty collateral. If the first asset in the emergency collateral has depegged the protocol will look to the second asset in the emergency collateral, and it will continue this process until it finds an asset in the Emergency Collateral Basket that has not depegged.

Problem Statement

USDP:
According to bluechip.org USDP is highly rated with a grade of A-. USDP is a reliable stablecoin however, it has a relatively small market cap(100m$) in comparison to other assets in the emergency collateral basket. USDP has very low DEX liquidity, which becomes an issue when the protocol is trying to scale into this asset, it will have a hard time trading into USDP when there is low DEX liquidity.

Rationale

The Emergency Collateral Backing should be made up of reliable, liquid and stable assets. These assets should have a high market cap and significant DEX liquidity. Keeping USDP in the emergency collateral basket potentially puts both RToken holders and RSR stakers at risk during an emergency situation.

USDP:
The DEX liquidity is necessary so that the protocol can safely trade into the assets in the emergency collateral.

pyUSD:
pyUSD has a market cap of $874 million and there is DEX liquidity. The DEX liquidity for pyUSD is not as liquid as USDC, USDT or DAI which is why it will be placed last. In an emergency situation it is ideal to have many options available.

Risks

There are no risks in improving the Emergency Collateral Backing.

Untitled (200 x 200 px) (1)

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