Updates on the Borrowing Rate for the Pseudo-Fixed-Interest (PFI) Model Lending Pool

Background

For stable and LST (Liquidity Staking Assets) pools, the PFI model lending pool, labeled as Pool #2, the interest model functions similarly to a fixed borrowing rate mechanism before it hits a utilization threshold. To refine this model and adapt to evolving market dynamics, we propose regular reviews and adjustments of interest rates.

Proposal

At present, the benchmark for the borrowing rate is 7%. We suggest allowing for agile adjustments to optimize the lending pool's performance. The proposed adjustment options for consideration are as follows:

• Option 1: 8%

• Option 2: 9%

• Option 3: 10%

• Option 4: 12%

(All options have already take market conditions into consideration that the values will ensure farming profitable in most cases.)

Rationale and Considerations

• Reducing Dependency on $EXTRA Emission: Higher lending APYs (Options 3&4) can reduce dependency on $EXTRA emission while increasing buyback revenue, thereby enhancing the value of $EXTRA. However, excessively high rates can also reduce demand.
• Attracting Capital: Higher lending APYs (Options 3&4) can incentivize increased capital inflow into the lending pool.
• Favorable Borrowing Rates: Conversely, lower lending APYs(Options 1&2) can translate to better borrowing rates for farmers, enhancing their profitability in the farming sector and also contribute to protocol fee revenue.
• Flexibility and Responsiveness: A regular review cycle ensures adaptability to changing market conditions, allowing for timely adjustments to maintain competitiveness and efficiency.
• Community Engagement: By providing a range of options and transparently communicating the implications of each choice, we empower community members to participate actively in decision-making, fostering a sense of ownership and alignment of interests.