# Adjust sDOLA Auction and DSA Parameters

**URL:** <https://forum.inverse.finance/t/adjust-sdola-auction-and-dsa-parameters/528>\
**Category:** Inverse Finance DAO\
**Created:** [January 13, 2025, 9:36pm UTC](https://forum.inverse.finance/t/adjust-sdola-auction-and-dsa-parameters/528 "2025-01-13T21:36:28Z")\
**Posts on this page:** 1\
**Page:** 1

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**Author:** ![cryptoharry](https://sea1.discourse-cdn.com/inverse/user_avatar/forum.inverse.finance/cryptoharry/32/22_2.png) [@cryptoharry](https://forum.inverse.finance/u/cryptoharry)\
**Post date:** [January 13, 2025, 9:36pm UTC](https://forum.inverse.finance/t/adjust-sdola-auction-and-dsa-parameters/528/1 "2025-01-13T21:36:28Z")

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# Adjust sDOLA Auction and DSA Parameters

## Background

sDOLA and the DSA were [launched in February 2024](https://forum.inverse.finance/t/launch-dsa-and-sdola/361) and have collectively returned over $168,000 to holders. Initially, sDOLA TVL growth was slow, taking nearly two months to reach $1M and another four months to achieve $2M. However, stronger PMF (Product-Market Fit) emerged in December 2024, with TVL surging from $1.7M on December 3rd to $8.05M as of today.

## Objective

sDOLA has demonstrated strong PMF across three key avenues:

1. **Yield Holders**

2. **Curve Pools**

3. **Lending Markets**

sDOLA benefits the DAO by driving DOLA purchases from the open market. This creates equivalent lending capacity, which, when utilized, results in more DBR burn than DBR issuance spent.

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## Proposed Adjustments

### 1. DSA Parameters

**Max DBR per DOLA per Year**

- **Current:** 0.99
- **Proposed:** 0.95
- **Rationale:** Lowering the maximum DBR per DOLA per year increases the DAO margin, incentivizing further sDOLA scaling. Each DSA deposit would cost 0.95 DBR/year to generate an additional 1 DBR burn. If the debt is directed into a DOLA LP (e.g., leveraged DOLA LP on FiRM) rather than sold, the efficiency increases to approximately 2.5 DBR burn per 0.95 DBR spent. [Read more in the prior proposal](https://forum.inverse.finance/t/launch-dsa-and-sdola/361#max-dbr-per-dola-per-year-dsa-11).

**Max Yearly Reward Budget**

- **Current:** 10M DBR/year
- **Proposed:** 20M DBR/year
- **Rationale:** Doubling the yearly reward budget ensures sDOLA has sufficient room to scale into emerging opportunities at the proposed max DBR rate, fully capitalizing on its potential.

### 2. sDOLA Auction

**Objective:**

The recent influx of sDOLA deposits presents an opportunity to deepen the auction while maintaining profitable arbitrage opportunities for participants. A deeper auction tightens the spread between the auction sell price and the DBR market price, reducing gas cost barriers and increasing sDOLA APY.

**Recommended Actions:**

1. **Increase dbrReserve to ~300K DBR:**

2. **Increase K Value:**

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## Yield Adjustment Overview

While reducing the max DBR per DOLA per year slightly decreases the DSA APR, sDOLA average yield is expected to rise due to the tighter auction spreads achieved through enhanced depth.

## Conclusion

These adjustments ensure sDOLA continues scaling effectively while maximizing benefits for the DAO and its stakeholders. By refining key parameters and leveraging recent momentum, this proposal seeks to cement sDOLA position as a leading stablecoin in the ecosystem.

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## On Chain Actions

- setMaxRewardPerDolaMantissa to 0.95
- setMaxYearlyRewardBudget to 20m
- setTargetK to 1.26E+46