P61 Money printer for jBRL on Midas

Midas Capital recently launched a money market on the BNB Chain, and has deployed a jFIAT pool there, allowing users to borrow and lend jBRL.

This proposal aims at seeding the liquidity for borrowing jBRL.

Currently there are 1.3M jBRL in circulation (ATH was 3M) = $233k

The current rate model of Midas is as follow:

• 5% of utilisation = 3% of interest
• 10% of utilisation = 4% of interest
• Then each 10% of utilisation until 80% = +2% of interest, so for example 20% = 6% of interest, 50% = 12% of interest and 80% = 18% of interests.

The current 2brl program pays 24% with a TVL of $750k.

1. Looping: If users borrow $150k of jBRL to do looping, the yield will drop to 20%. It is safe to say that 20% will still attract capital, and that until the interests remain below 10% (equaling to 40% of utilisation), users would deposit all the jBRL they borrow into the 2brl farming program and not sell jBRL.

Therefore, borrowing $150k of jBRL should not pose any issue for the protocol. At 40% of utilisation, it equals to a total liquidity of $375k of jBRL.

2. Off-ramp Users borrowing jBRL to off-ramp won't pose any issue to the protocol since they will swap the jBRL for BRZ in the 2brl pool. It is hard to estimate how much ppl will borrow for the purpose of off-ramping, but we could imagine that the number will be small until the off-ramping remains complex (involves multiple transactions for now).

3. Shorting BRLUSD Users using the pool for shorting could create some issues in terms of liquidity as you know! We can start with a conservative approach and allow them to sell up to 25% of the current supply ($60k of jBRL). It is still unclear if the shorting will be used a lot.

4. Counter the risks So, reasonably, we could mint 60 + 375 = $435k jBRL. But, if we consider that people will short BRLUSD massively it can pose some issues in terms of liquidity for the protocol. If this is happening, I would suggest the following: the treasury will withdraw and burn all the unused jBRL forcing people to repay their loan, and will sell our jBRL position to free liquidity + will add the proceeds of the sale to add liquidity in the protocol.

5. Midas risk Midas is a fork of Fuse, which is a battle tested money market on Ethereum. The issues that have involved Fuse have been oracle manipulation and reentrency, two things that cannot happen in our pool.

Midas has been audited by Zelig (same auditor as Jarvis).

Yet, there is a risk that someone would succeed to exploit Midas and steal/borrow all the jBRL and dump them for BUSD on Jarvis Exchange, destroying the selling liquidity. To reimburse their loans, users will need to buy back jBRL from the protocol but it is not sure whether people would do it or just dump their collateral.

Therefore keep in mind that the more we mint the higher the impact on the user of the protocol in case of Midas being exploited.

6. Vote I propose few options:

7. YOLO: mint $435k of jBRL.

8. Yolo: mint $220k of jBRL.

9. No-yolo: mint $110k of jBRL.

10. No: mint 0.