Proposal to Increase maxRewardRate for DBR Issuance

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Summary:

This is a follow up proposal to Proposal #109 and seeks to increase the maxRewardRate for DBR issuance to INV stakers to address the current dynamics of the DBR market, accommodate the current FiRM expansionary policy, and ensure the continued growth and success of FiRM.

Recent Developments:

  1. FiRM TVL has reached an all-time-high of ~$30M, showcasing significant growth and user participation. Notably, the CRV, cvxCRV, and gOHM markets have emerged as leaders in terms of deposits and borrow activity.
  2. The total amount of borrows on FiRM has surpassed the $10M milestone, demonstrating a growing demand for borrowing DOLA on the platform. This surge in borrowing activities signifies the increasing adoption and recognition of FiRM as a reliable borrowing market.
  3. INV stakers have been benefiting from a remarkable (real) yield of over 30% APR, thanks to the DBR streaming mechanism. This attractive real yield has incentivized some stakers to actively participate in FiRM and contribute to the platform’s success.
  4. The swap rate of DBR has experienced a significant increase, recently reaching an all-time high of $0.0954 (or 9.54% fixed-cost to borrow). This surge in DBR price can be attributed to the rising demand for DOLA borrowing.
  5. “Annualized DBR burn rate” has recently surpassed the max allowable “Annualized DBR issuance rate” due to the increase in active borrows. This has caused DBR to be a net deflationary token. Despite setting the DBR reward rate to the current maxRewardRate of 0.3171 (10m DBR per year) for over a week, the demand for DOLA has continued to outpace the DBR issuance therefore warranting this proposal.

Proposal Details:

To address the increasing demand for DOLA borrowing and maintain a balance between DBR issuance and borrowing activities, this proposal seeks to increase the maxRewardRate for DBR issuance previously set to 0.3171 or 10m DBR per year. By increasing the maxRewardRate, we aim to align the issuance of DBR tokens with the growing borrowing demand and ensure a sustainable DBR market. This increased issuance rate will provide the necessary liquidity and supply to meet the demand for borrowing DOLA on FiRM, potentially stabilizing the DBR price, incentivizing INV stakers with greater rewards, and fostering continued growth and user engagement. By approving this proposal, we can ensure the long-term sustainability and success of Inverse Finance and FiRM.

On-Chain Actions:

  • Set the maxRewardRate to 0.6342 (20m DBR per year)