MIP1- Add USDC Bond

Background:

The Treasury has already accumulated USD 21 million in assets, with USD 14 million of liquidity, and USD 5.6 million of Risk-Free Assets. We propose to add USDC Bonds so as to increase the proportion of stablecoins in the Treasury. This proposal intends to reduce the Discount for Meta-USDT and Meta-USDC, and add USDC Bonds with the same Discount rate as BUSD Bonds.

Motivation:

The level of Risk-Free Assets is the key risk-control mechanism for the Treasury. We would like to see the Risk-Free Assets in the Treasury at a more reasonable level of 50%. To that end, we will be adding USDC bonds so as to take in more stablecoins and stay closer to that target level.

Summary

BCV is an adjustable variable for Bond operations and it directly affects Bond Discount rates. We can adjust the Bond Discount rate lower by adjusting the BCV. The Meta-USDT and Meta-USDC BCV rates are currently at 70 and 80, respectively; and we propose to adjust that to: 90. This will lower the discount offered for Bonds for Meta-USDT and Meta-USDC, making them less attractive, and then USDC Bonds will be added.

Anticipated Result:

We expect to increase bond offerings while also keeping inflation within a reasonable range.