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BasisDollarBasisDollarby0xF8E802f5adE72D09a601cebD027d00779f5f8C2B0xF8E8…8C2B

BDIP09: Cap BSD inflation at 2.5% per epoch when BSD > $1

Voting ended about 5 years agoSucceeded

As per https://docs.basisdollar.fi/ProtocolParameters, during expansion periods, inflation is capped at 4.5% or 9.0% (depending on whether there is system debt outstanding).

The rate of BSD printing may result in rapid deceleration of BSD price past $1, until it is below $1.

2.5% compounded every 12 hours, doubles the amount of BSD in existence in 28 epochs (14 days).

How it works (Mechanism):

Amend the following as such:

WDP above 1$ where amount of $BSD in Treasury contract >= total Supply of $BSDB (Basis Dollar Bond) Maximum Supply Expansion: 1.25% Expansion Percentage: WDPrice - 1 * 100 or 1.25% (whichever is lower)

WDP above 1$ where amount of $BSD in Treasury contract < total Supply of $BSDB (Basis Dollar Bond) Maximum Supply Expansion: 2.5% Expansion Percentage: WDPrice - 1 * 100 or 2.5% (whichever is lower)

Advantages:

  1. For those in the BSD/DAI and BSD/USDC farms, this reduces the extent of impermanent loss you face as there will be less BSD printed and therefore potentially less sold into the farms.
  2. Reduces inflation during an epoch where BSD > $1.

Disadvantages:

  1. The APY on Seignorage Shares will decline as BSD inflation will be reduced. However, this may lead to normalized, sustainable long-term APY, rather than short-term capital that moves in and out.
  2. Due to the reduction in BSD emission when BSD > $1, there will also be less BSD available for bonds to be redeemed (ensuring that all bondholders will tend to be come long-term bondholders rather than short-term bondholders). It will take more time to clear system debt. However, this will also mean that we will be less likely to fall below the $1 peg and therefore have smaller amounts of system debt.

Off-Chain Vote

YES: Cap BSD inflation / epoch
5.31K 97.6%
NO: Keep existing higher cap
132.41 2.4%
Download mobile app to vote

Timeline

Jan 10, 2021Proposal created
Jan 10, 2021Proposal vote started
Jan 12, 2021Proposal vote ended
Oct 26, 2023Proposal updated