This post is a follow-on to TAP-27, contingent on a “Reject” vote passing. It looks to provide a passable, holistic Cooler loan proposal, with no necessary subordinate amendments. It will describe each step and process for implementation, to be followed verbatim unless and until a future proposal affects changes.
The vote to be conducted is the following:
90% consolidated backing lent per collateral token; 0.5% interest per annum
95% consolidated backing lent per collateral token; 0.5% interest per annum
95% consolidated backing lent per collateral token; 3.3% interest per annum
Back to the drawing board
Loan values are referred to relative to “consolidated backing” rather than discrete values. This avoids a repeat of TAP-25, where 95% represented ~3,000 DAI per gOHM at the start of the proposal and ~2,850 at the start of the vote. A discrete loan value would be set following a passing vote and subsequent consolidation of treasury into non-volatile assets (stable coins). I suggest a mix of DAI and LUSD, based primarily on their censorship resistance and the yields they offer today (FRAX is no longer competitive relative to the DSR or stability pool at this time). Should backing per token grow in the future, an amendment proposal could pass raising the loan value; until that point, loan values would remain the same.
Loan tenures are 121 days (four months) at a time. Users should understand that they can roll at any time in advance — you do not need to wait until your loan is near/at expiration to do so. The largest downside of a shorter tenure is an increase in gas expenditure, but benefits to the protocol regarding finality and interest accrual seem to make this worthwhile.
Clearinghouse capacity are handled via rolling top-ups to the facility. At the start of each week (the first day of the week dictated by the first day the clearinghouse is live), the clearinghouse is topped up or drawn down to hold a liquid balance of 18m DAI. If the preceding week saw more loans than repayments, a top-up would occur, adding DAI liquidity for loans. If the preceding week saw more repayments than loans, a draw-down would occur, removing DAI liquidity. Pending technical viability, any balance in excess of 3m DAI held by the clearinghouse at the start of the week will be held in the DSR. Rebalancing of the facility’s liquidity occurs in perpetuity.
RBS will be retuned so that its lower cushion sits at a minimum 2% margin to loan value. This ensures against arbitrage through the clearinghouse facility. This is a minimum because RBS remains dynamic and subject to rise above its floor value.
Regarding the recent Phaeton proposal, we suggest that if it proceeds, it is implemented with a separate token and a conversion of backing upon migration. Users should opt-in rather than having a conversion of all users via majority rule. In this case, Cooler does not interfere; a user moving to the all ETH protocol would repay their OHM loan and migrate. Cooler also removes opportunity cost while that proposal proceeds and protocol is developed, allowing all time needed. We view these two proposals as symbiotic in many regards, though certainly separate.
This proposal has a tentative vote date of Friday, June 30, given forum rules have been met. As with TAP-25 & TAP-27, it will run one week. Should it look likely to pass, author will enter an audit with Sherlock, fronting costs to be reimbursed upon the passage of the proposal.
To summarise the timeline of this proposal:
00:00 Tuesday, June 27 posted
00:00 Saturday, July 1 to snapshot
Week of July 3 code into audit
00:00 Saturday, July 8 snapshot concludes
Week of July 10 audit concludes + treasury consolidated
Week of July 17 code is deployed and clearinghouse is funded
Weeks of July 24 onward, clearinghouse is topped-up or drawn-down