[BIP-11] An overall proposal to increase the tunnel capacity

Recently, the tunnel capacity has reached maximum limit and our community has been actively seeking possible solutions. After having some related discussions in the Discord, we have made this proposal as below.

The aim of this proposal is to further increase the BoringDAO tunnel capacity and facilitate potential cooperations with other projects such as Sunder project. It will be composed of 3 parts.

(1) Create new pool of $BORING to attract more $BORING to be staked; (2) Create new Satellite City poolS of oLTC & oDoge, and encourage users to move oLTC and oDoge from the Wild West pool to the new Satellite City pool; (3) Reduce the oBTC tunnel pledge ratio from 115% to 105%;

First, a new satellite city pool that provides yields for the farmers through deposition of $BORING, which can be redeemed at anytime, will be established. This will allow BoringDAO to further collaborate with Sunder Protocol to provide a solution that enables participants to enjoy the voting rights while being able to bear interest. At the same time, it can attract more $BORING that hasn't been staked in the tunnel in to the system.

Second, oLTC and oDOGE pools will be added into the satellite city. It will encourage users to move oLTC and oDOGE from the Wild West to the Satellite City pool. In this way, more assets will be staked, which can accelerate the increment of tunnel capacity additionally.

Third, the pledge ratio will be decreased from 115% to 105%, which could lead to an increase of total tunnel capacity. BoringDAO has been operating with 0 security issues for more than 10 months, therefore, we believe that decreasing the pledge ratio is one of the acceptable options for increasing the total tunnel capacity.

Overall, we estimate the total tunnel capacity can be increased by around $10M. After the BIP11, the whole capacity is expected to increase by 4198 oBTC.

The establishment of the Satellite City pool will encourage users to move oLTC and oDoge from the Wild West pool to the new pool. Also this new pool can attract ~20,000,000 more $BORING to be staked.

Detailed calculations: ● current capacity: 1110 oBTC ● used capacity: 1794 oBTC ● current pledge ratio: 109.28% ● current pledge: 1794 oBTC * 109.28% = 1960.4 oBTC ● over pledge: 1960.4 - 1794 = 166.4 oBTC ● estimated pledge increase: ○ oLTC: 20,000 * $220 / $51000=86.2 oBTC ○ oDoge: 1,000,000 * $0.3 / $51000=5.8 oBTC ○ BORING: 20,000,000 * $0.018 / $51000=7 oBTC ● total over pledge after the BIP11: 166.4 + 86.2 + 5.8 + 7 = 265.4 oBTC ● total maximum capacity after the BIP11: 265.4 / (105%-100%) = 5308 oBTC ● estimated capacity increase after the BIP11: 5308 - 1110 = 4198 oBTC

In the short to middle term, it might be the last time to propose to decrease the pledge ratio. In the future, most likely the ratio will be increased. Concurrently, in order to further increase the security of oBTC, BoringDAO will continue to develop Shadow Bitcoin, Nash Equilibrium Lock (NEL) and add more signers etc.

The Cons of this proposal:

1. oBTC capacity will be increased to ~5300, and will not hit the limit in the short term
2. The kinds of pledge will be increased and the total amount of pledge will also be elevated
3. More $BORING will be brought to the system from CEX and DEX

The Pros of this proposal

1. If any black swan issue occurs, oBTC holder will retrieve less compensation when pledge get liquidated.
2. If the proposal passed, oLTC & oDOGE will have the risk of being liquidated in a black swan issue