Allow team to manage vault ceilings

Abstract:

In order to manage risks, each vault has a specific debt ceiling. If demand for a vault is high the ceiling can be reached and the maximum amount of borrowers too. Ceilings need to pass a PIP to be raised each time.

Background:

Thanks to the introduction of the various new JPEG lock mechanisms, the ability to get up to 60% LTV on positions and the demand for pETH and the juicy yields it offers, some vaults have been maxed out and aren’t allowing users to borrow anymore pETH using certain collaterals.

Ceilings are put in place to limit protocol risks and adjust with demand. Creating a PIP to manage the ceiling of vaults is slow and doesn’t allow the DAO to react to new market conditions and demand.

The team should have the ability to raise the ceiling, lower the ceiling or close a vault if need be. Ceiling movements shouldn’t be more than 20% increase/decrease every 2-3 weeks, except for exceptional movements that could create bad debt and necessitate full vault closure.

The community should still keep the power to define a vault ceiling via PIP if it ever happens.

Proposal:

Give the ability to the team to independently manage vault ceilings and emergency closing. Vaults ceilings movement should not exceed 20% increase or decrease in 2 weeks time.
In exceptional market events, the team can reduce a vault’s ceiling so no extra borrows can be done.
Vault parameters can still be passed by votes if the community deems it necessary.

4 Likes

No, team shouldn’t be allowed to do ANYTHING without a vote. Team had control of the rock vault and all they did was park their Rocks in it and then close it off from the rest of the public.

Team should buy more tokens if they want to control everything.

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Good idea, it provides the flexibility to change the celing limit of the treasury, and it can also handle some emergencies urgently

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I think there are two proposals here and I suggest splitting them up.

I am guessing the expectation is that the team will raise ceiling limits as soon as they are hit/before they are hit unless there is an explicit reason not to do so? If that is the expectation, maybe it can be worded as such, since that is a BAU type of change.

i.e. Team will raise ceiling by 20% as soon as it is reached. Team cannot do more than one ceiling raise every 14 days without a vote.

With regard to lowering ceilings or closing a vault, that is emergency powers, and I’m not sure that should be in the same vote. I can’t see a scenario where a vault needs to be closed or ceiling lowered that is not an emergency risk management scenario. In that case, the team should be granted the power to pause loans to any vault at any time for risk purposes. Under that circumstance, a vote should be held to retroactively confirm/repudiate the decision, and certainly anything where ceiling is lowered or vault closed would need a full discussion and vote.

I don’t think it should be expected that debt ceiling would be lowered and raised on an ongoing basis as part of BAU activities, so the proposal should be worded to reflect that expectation.

3 Likes