RFC
Summary
Remove lower yield asset from the rgUSD basket and replace with a more scalable, higher yield and liquid asset.
Current Basket:
100% Aave V2 DAI
New Basket:
100% sDAI
Abstract
The proposed changes, if enacted, would change the collateral basket from Aave DAI to sDAI in order to capture a higher sDAI yield of 10%, since yields on Aave DAI have fallen to ~7%.
Problem Statement
The current basket for rgUSD contains 100% of Aave V2 DAI and market rates for supplying DAI have dropped below 10%. For the collateral basket, we are targeting a balance of high yield and low risk assets that are simple to keep minting costs as low as possible while rgUSD is ramping up TVL. There are other options for collateral basket assets that fit this criteria and are higher yielding.
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 currently 10% and so beating yields captured from deploying rgUSD capital on Aave DAI.
Risks
By replacing the lower yielding asset from the rgUSD collateral basket, we believe that we are improving the overall yield and scalability of rgUSD. The basket change will maintain exposure to the same underlying asset (DAI) which is a safe stablecoin with a B+ rating on Bluechip. Therefore, this proposal will not increase the risk profile of rgUSD while increasing yield and maintaining low cost to mint.
- Yes, I support changing the rgUSD basket from aDAI to sDAI
- No, I do not support changing the rgUSD basket
4 Likes
I support this proposal. Improving the yield without increasing the risk is a good idea.
5 Likes
I support the proposed change to switch the collateral from Aave V3 DAI to sDAI. However, I have a question regarding our diversification strategy.
Currently, allocating 100% of the underlying collateral to a single strategy has its merits, but have we considered the benefits of further diversification? Diversifying the collateral could enhance the robustness of our approach by spreading risk and potentially increasing yield opportunities across different assets or strategies.
One of the key advantages of RTokens is their ability to offer a yield-bearing and inflation-proof currency. They also provide an adjustable underlying pool of collaterals, which makes high yields accessible to a broader audience without the need for them to actively manage or adjust their investments.
Is there a plan in place to eventually diversify beyond a single type of collateral? Expanding our collateral base could not only secure higher yields under different market conditions but also increase the stability and appeal of rgUSD.
Thank you for the comment!
I totally agree with what you are saying - there is definitely a role for diversification to play here. We have a few ideas churning for the medium/long term, but right now the focus has been around launching rgUSD and positioning it in the best venues.
As we put rgUSD in a better position to succeed, we will focus more and more attention towards the roadmap - one that definitely needs to seriously consider diversification.
3 Likes
Thank you, this is an awesome response!
Going to stake RSR to support!
2 Likes