[ARC] E-Mode Parameter Changes for V3 Avalanche, Optimism, Polygon, and Arbitrum
Vote Result: Option 1A
Rationale
We recommend Option 1A, since we agree with Wintermute that for users to use e-mode, it needs to offer more capital efficient parameters than regular borrowing, which is achieved under Option 1A while still offering various trading strategies. Option 1A is simply a more conservative version of Option 1, which we think is fair at this point given market conditions and the wider macroeconomy. Another positive is that Chaos Labs is supportive of Option 1A and has laid out a plan of implementing 3 consecutive 3.5% reductions to mitigate the impact on liquidations and user experience. Gauntlet has also implemented Chaos’ suggestion of reducing LTV to 80% which will further protect retail users from liquidations.
Regarding the other options, Option 2 limits e-mode to mostly ‘USDC’ based stablecoins, while Option 3 is just a more conservative version of Option 2. This reduces the benefits of e-mode significantly, one of which is arbitrage between stablecoins. Lastly, Option 4 does not make sense since stablecoin e-mode is still valuable.
Therefore, we will vote YES in favour of Option 1A.