YIP-2: RebaseLag Modification

Forum Discussion: https://forum.yam.finance/t/yip-rebase-parameter-modifications/452

Basic Summary

Based on recent market conditions, we propose to modify key parameters of the Yam protocol to mitigate market impact of treasury purchases. These are levers built within the protocol to adjust on an as needed basis. While several levers exist, the simplest to achieve the desired effect are limiting the MaxSlippage allowed by a treasury purchase and increasing the RebaseLag, which will lessen the change in supply of each rebase and create a more gradual rebasing effect. We propose to increase RebaseLag to 20, which would smooth rebases over 10 days rather than 5.

On-chain action: Target: rebaser Function: setRebaseLag(20)

Abstract

It was always likely that the initial protocol parameters would need to be fine tuned according to market dynamics. Within the first few rebases, we have seen this to be true, as market impact from treasury purchases has had adverse market reactions.

It is also true that we have begun effectively bootstrapping a high potential treasury, but we must consider how to grow in a consistent and sustainable manner. As such, we will be creating proposals for the modification of the following parameter:

RebaseLag: Increase from 10 to 20

Motivation

RebaseLag increase - This would make each rebase less extreme. New supply is calculated by CurrSupply * DeviationFromPeg/RebaseLag, so increasing RebaseLag would result in smaller changes in supply, and a smoothing out of This would lead to a slower decrease in price due to positive rebases, though also a slower increase in price due to negative.