Your free to review the data and have at. Your numbers are not correct because you have numerous false assumptions. Feel free to DM me to go over privately if you’d like and I can walk you through. I’m fine posting here personally.
https://docs.google.com/spreadsheets/d/1nMJfl2-0WrE2R02HiAiRhcRErPsV3KzWSD121rC21j0/edit?usp=sharing
As it stands, you are proposing APY’s with no reference to impact, so I don’t know how anyone in here can be expected to make an informed choice. Seems more, pick a number that feels good and figure out your own impact. (Thus my actions)
I’d like to state again, I’m using APR. I don’t know the frequency of compounding and haven’t gone about calculating it. If you do, maybe you would like to put out numbers to your liking. This is how I put out numbers.
Ok so lets return again to the discussion now that we’ve had that out of the way.
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Let me contextualize what we can learn from knowing rebase earned and using APR despite being aware that compounding will reduce time:
- it will accurately reflect the targeted amount to be paid to achieve equilibrium.
- it will project a greater amount of time to reach equilibrium than is necessary.
But here we have a few things going for us.
- The time frame we are gauging is one year.
- The time frame of attacking rebase < 1 day.
So i don’t care if I get time wrong, as I’m getting the daily amount needing to be paid correctly and that is the most important part which impacts our friend the car buyers choice, coming from a place as conservative as possible to appease to you. No compounding.
If actor 4 causes 100% utilization for a minute at every single positive rebase day(as you suggested). This will only raise APY from 2% to 2.13% assuming 90 days of positive rebase a year.
We’ve moved on from the debate from this. Keep up.
Actor 4 causes 100% utilization for as long as needed to match rebase. It would be 1 minute at the initial rates I provided but since we are capping rates, it floats outward for a longer period until equilibrium is reached.
Last charts posted demonstrated increasing max rate reduces time at max utilization, but does not affect the total amount charged.
It seems your arguments are pointing to that the APY is too high for 1 & 3, This ARC is suggesting lowering the APY from the current astronomically high (2.69E+43%) one due to the over-approximation explained in the original post.
My point is that interest will be to high for actors 1-3 due to actor 4 because actor 4 will make real amount charged equal to that as rebase gained regardless of max interest rate.
So 1-3 are actually invested not in a stable borrow within a price peg channel, but have abstract exposure to positive rebase, and negative rebase acts reduce the likelyhood they can sell low on a crash.
Thus rebase means Debt has exposure to volatile gains, but reduced exposure to volatile losses.
Net worse for actors 1-3 than borrowing AMPL without the fancy rebase takes.
And while actor 4 wins out, its still not a good product for them. Thus not a good product for anybody.
It is very unclear from your points if you are trying to make the case for even lower APY than this proposal or for keeping it as is in the current astronomical state.
My initial point was that 10k APY does not match interest needed to reach equilibrium. This pushed us to the understanding that it will reach equilibrium by pushing outward to slim margins. What’s that affect on borrowers. Very high realized costs. Thus the conversation shifted towards borrowers. We were given 4 types of borrowers,
This market seems intended for types 1-3, but we can show 4 wins while 1-3 are negatively affected.
I think its important to note an APY’s effect on time at 100% utilization since my current work has shown rates impact time but not amount paid.
If your intention is to make the case for a completely different behavior then the best way is to discuss that in https://forum.ampleforth.org/ , Ampleforth Official or another AAVE ARC if it is ready for that stage. As that is outside the scope of an interest rate curve adjustment.
My intention is to make the case that we are picking interest rates blind with no visibility into how they will affect the market, and as proposers, you have a responsibility to consider the impact of your discussions and make sure voters can make informed decisions.