Thanks to everyone for sharing your views and analysis of the AMPL interest rate. Its one of the best debated subjects on the forum
It seems we have consensus around the need for the Aave UI to reflect the approximation of the interest rate compounding
With regards to the AMPL interest rate parameters, while the community seems to agree on the need for an update, there are two main views:
- Maximise utility for borrowers with “reasonable” borrowing costs with a lower slope 2 parameter and lower borrowing rates at high utilisation
- Protect liquidity for depositors to enable Aave withdrawals at any time requiring a higher slope 2 parameter and overall higher borrowing rates at high utilisation (to cover the rebasing arbitrage opportunity)
An interest rate model with 3 slopes might be able satisfy both perspectives but for the time being we need to adapt the current model
@Naguib it would be really great to have the Snapshot cover the various views of the community (showing the slope parameter but also rate projections) to gauge not only support but also preferred outcome
For example:
a) Do not change AMPL interest rate model with slope 2 = 10,000%; leading to 2.69E+43%APY at 100% utilisation
b) Change AMPL slope 2 to 750%; leading to 186,210.38% APY at 100% utilisation
c) Change AMPL slope 2 to 1,500%; leading to x% APY at 100% utilisation
d) Changel AMPL slope 2 to 2,500%; leading to x% APY at 100% utilisation
e) …