Recommendation Update
Our interest rate curve proposals for USDT and TUSD include increasing the variable rate slope 2. In order to keep the stable borrowing rates above the variable borrowing rates at all levels of utilization at the current oracle market rate of 10%, we recommend increasing the stable rate slope 2 parameters for both of these assets by the same amount. We note that the stable rate slope 2 is currently identical to the variable rate slope 2 for every Aave v2 Ethereum asset with stable borrowing enabled.
The proposed interest rate and reserve factor changes are shown in the following table. To clarify, USDT utilization is currently below 80% (the proposed uOptimal change), and TUSD utilization is currently below the optimal utilization. So, these interest rate curve changes to stable curves will not change the existing stable curve rate at current utilization levels.
As such, given that the community has already voted in favor of the variable curve changes, and that these stable curve changes are to standardize the relation between stable and variable rates, we do not plan on putting up another Snapshot vote unless the community voices otherwise. We plan on moving forward with AIP early next week.
Specification
| Parameter | USDT Current | USDT Proposed | TUSD Current | TUSD Proposed |
|---|---|---|---|---|
| base | 0.0 | 0.0 | 0.0 | 0.0 |
| optimal | 0.9 | 0.8 | 0.8 | 0.8 |
| reserve factor | 0.1 | 0.1 | 0.1 | 0.05 |
| variable slope 1 | 0.04 | 0.04 | 0.04 | 0.04 |
| stable slope 1 | 0.02 | 0.02 | 0.02 | 0.02 |
| variable slope 2 | 0.6 | 0.75 | 0.75 | 1.0 |
| stable slope 2 | 0.6 | 0.75 | 0.75 | 1.0 |
The proposed variable and stable borrowing rate curves are shown in the figures below.
