Adjusting Base Rates for OpenLeverage Lending Pools

Overview

This proposal aims to improve the capital inefficiency in OpenLeverage's lending pools for major, medium-sized, and altcoins. The existing lending rates have been identified as insufficiently attractive to incentivize more liquidity provision and encourage borrowers to return assets, even when pools operate at high utilization levels.

To rectify this, we propose reconfiguring the interest rate tiers for each category of lending pool. This is a crucial change targeted at enhancing capital efficiency and accelerating the growth of the Total Value Locked (TVL) within the platform.

Current State

Current Rate Levels

• Major Coins

  • Start Rate: 1%
  • Kink: 85%
  • Kink Rate: 6.50%
  • Max Rate: 50%

• Medium-sized Coins

  • Start Rate: 5%
  • Kink: 75%
  • Kink Rate: 10%
  • Max Rate: 100%

• Altcoins

  • Start Rate: 20%
  • Kink: 50%
  • Kink Rate: 50%
  • Max Rate: 100%

Proposal

New Rate Levels

• Major Coins

  • Start Rate: 8%
  • Kink: 60%
  • Kink Rate: 20%
  • Max Rate: 100%

• Medium-sized Coins

  • Start Rate: 12%
  • Kink: 50%
  • Kink Rate: 50%
  • Max Rate: 120%

• Altcoins

  • Start Rate: 20%
  • Kink: 50%
  • Kink Rate: 80%
  • Max Rate: 200%

Rationale

1. Improved Liquidity: A higher base rate would act as a more enticing carrot for potential liquidity providers. This is crucial for the ecosystem to flourish and offer better services to the users.
2. Enhanced Capital Efficiency: Increasing the Kink and Max Rate rates would make the lending pools more capital efficient, especially during high-utilization periods.
3. Competitive Rates: Despite these increases, the proposed rates remain competitive compared to other leverage trading platforms, which often have an annualized funding rate of 30%-80%.
4. User Behavior: A more attractive interest rate landscape could encourage borrowers to return borrowed assets, thereby reducing systemic risk.

Voting Options

1. Approve the proposal: Accept the new interest rate levels as proposed.
2. Reject the proposal: Keep the current interest rate levels.
3. Modify the proposal: Open to suggestions for amendments.

Timeline

• Snapshot Voting Period: The voting will be open for three days after publishing the proposal.
• Implementation: If approved, the new rate levels will be implemented within one week after the end of the voting period.