OUSD currently has a withdrawal buffer where a small portion of backing funds are held in the vault instead of being deployed into underlying strategies. Today, 543,161.37 (0.5%) stablecoins are sitting idle not doing anything. This is hurting the APY for all OUSD holders.
The original idea of the buffer was to allow people to redeem OUSD without having to pay so much in gas costs. However, since adding intelligent price routing to the OUSD DApp, redemptions have become exceedingly rare. Given the depth of liquidity for OUSD, it's almost always a better deal to sell your OUSD to an AMM than pay the 0.5% exit fee. By removing the withdrawal buffer we can simplify our code, reduce the gas costs for mints, and slightly increase the APY for all OUSD holders.
By removing the buffer, redemptions will cost more gas since they will require actually withdrawing funds from the underlying strategies. I think this is an acceptable tradeoff as we should always prioritize the experience of OUSD holders instead of people exiting the protocol.
I'd propose we remove the buffer in two steps. Assuming this proposal passes, we would first set the buffer to zero. Then later when we get a chance, we should clean up the code to remove the buffer logic altogether.