ℓIP: P-ratio adjustments

SUMMARY:

To implement protocol changes reducing: the target P-ratio, the P-ratio to remove liquidation unmarking, and liquidation delay time.

PROPOSAL:

i) P-ratio to build / claim rewards

Reduce from 500 → 450

Allows users to claim rewards and build ℓUSD at a lower P-ratio, thus increasing the amount of ℓUSD in circulation.

ii) P-ratio to remove liquidation marking

Reduce from 500 → 400

Allows users to restore their P-ratio and unmark accounts at a lowered ℓUSD amount.

If a user’s account has been marked (P-ratio < 200) and their P-ratio is restored to above 400 but below 450 (400 < P-ratio < 450). User will no longer be marked for liquidation, but will not be able to claim weekly rewards.

iii) P-ratio to mark account for liquidation

Keep liquidation marking at 200

Remains as is to ensure the healthiness of the protocol.

iv) Liquidation delay time

Reduce from 72-hour to 48-hour time frame.

Marked stakers will have a 48-hour time frame to deposit additional LINA or burn ℓUSD to return their account to above a 400 P-ratio. If the P-ratio of the marked account fails to return to above 400 within the 48-hour time frame, the account would be subject to liquidation.

CONCLUSION:

We believe the above proposal aligns with the general sentiment in the Linear DAO and trust that neither of the above proposed changes will have detrimental affect on the healthiness of the protocol (since liquidation threshold stays the same) but rather allow users to claim rewards at a lower P-ratio and build more ℓUSD for the same amount of collateral. We also believe it will have a secondary affect on the ℓUSD peg, whereby the buy pressure from the need to restore P-ratio has been lowered.

Upon successful vote, we estimate 3-4 weeks for implementation.

Full discussion in Linear DAO Forum can be found at: https://forum.linear.finance/t/pip-reduce-the-pledge-ratio-to-reduce-the-usd-value-according-to-the-current-peg/347