[TEMP CHECK] Polygon v2 to v3 Liquidity Migration

[WintermuteGovernance]

Apologies as we are a bit late to this proposal.

@MatthewGraham

If just the RF was increased on v2, then deposit rates on v2 would reduce and borrowing which is already slightly more expensive relative to v3 would remain unchanged, thus providing no additional incentive for borrowers to migrate. This is especially true for those that have deposited wMATIC, wETH or wBTC and borrowed stable coins. Thus the need to increase borrowing costs on v2 relative to v3

I’m not sure if this assumption holds up. If RF is increased, supplying to V2 is less attractive, and assuming depositors are profit-maximizing they would seek to migrate to V3 if V3’s supply rate is notably better. If V2 suppliers were to migrate to V3, V2 utilization increases making it more expensive for borrowers. Depending on the borrower’s preference, they can choose to close their position and exit or close their position and migrate.

In general, as we discussed in the other migration forum. We are not in favour of forcefully creating an adverse environment for the sake of migration. Focusing on V3 market offerings, exogenous incentives, and greater capital efficiency, should be enough to migrate users over time.