With the current model, 12hr TWAP must be greater than 1.05$ for an expansion and must be at least greater than 1$ to issue ARTH for bond redemption.
i) Bond redemption: 12hr TWAP & 1 hr TWAP> 1$
ii) Expansion: 12 hr TWAP>1.05$
Additionally, with the latest updates, MAHA fees are charged when selling under 1$ and rewarded when buying under 1$. This is great except people can and will sell as soon as we hit the 1$ mark (avoiding any MAHA fees). Eg: A whale already managed to sell 10k ARTH when price is above 1$, completely MAHA fee-less, which quickly brought price back below peg after the introduction of additional 2500 MAHA rewards for the first 50k ARTH purchased.
We not only have to hit the 1$ mark, but actually sustain the price at 1$ or greater for 12 hr TWAP to be greater than 1$ so that ARTH can be minted and bond debts can be cleared. However, with selling fee and rewards halted at 1$, ARTH will not be able to breach the 1$ long enough for the 12hr TWAP to be greater than 1$. This has 2 implications:-
i) No ARTH minted to clear off bond debt and also no expansion
ii) Waste of MAHA rewards as the price would quickly be brought down below peg.
Change: Increase the price ceiling/floor of 1$ to 1.05$.
Implications:-
i) Selling below 1.05$ will be charged with MAHA fees
ii) Buying below 1.05$ will be rewarded with MAHA
Reasoning: With a higher ceiling/floor, it will be much easier for ARTH to be maintained above 1$, hence this will be easier for the protocol to mint ARTH to clear bond debts. The faster the protocol is able to clear the bond debts, the more confident and reassured the community will be.
This is very smart. Our target should be expansion and not just treading water. I think we can implement this with Micheal’s current proposal since he shares your feeling.
As i have earlier mentioned in the group, charging for the fee should be dynamic.
For instance, if the fee is charged till 1.1, the twap price will be easily over 1.05 and we will be into expansion mode.
Once the bond debts are cleared, the fee can be reduced to at 1.05 and subsequently to 1.
This is more aggressive, and i suppose when we have done all to get the buy pressure high, why to leave this stone unturned.
All of us saw, how good it was , in the expansion phase. During this bull run cycle, it is more prudent to be in an expasionary phase.
1.05 floor should get us to hoover above 1.00 mark, that is our goal, we need to be in safe zone that is 0.95-1.05. This will clear bonds debt. As Steven mentioned we can drop floor down when we clear debt, expansion will come with demand. We don’t want to over expand before ARTH has more use cases. So yes we should change floor from 1.00 to 1.05 mark until we clear debt.
This in combination with AIP9 would make a perfect solution to bolster confidence in purchasing bonds - being the primary driver for price recovery.
My only suggestion here, is that this extended floor/ceiling be lifted off once bond debt has been paid off. Reason being, is that further down the line when more volume and liquidity is invested into the market, there should be a ‘window space’ where trading can occur without impact of fee or reward. This window would be the GMU to GMU +5 cents.
This proposal aims to provide a solution for greater opportunity at bond redemption. However, once Arth is stable, perhaps even with merchant use and credit cards implemented, we don’t want ordinary transactions within the stable range to experience reward/fees on top of transactions.
My suggestion is this extended ceiling be implemented for the duration that there is outstanding bond debt, but be lifted once that is settled.
Yes it does make sense to set a higher cutoff price at 1.1$ temporarily just to clear bond debts but I’m not sure how it could affect the entire project in terms of economics and community sentiment. With that said, the cutoff price suggested here can be changed by the team as they see fit.
Yes absolutely. This is definitely a temporary change just for clearing bond debts. The team has much deeper knowledge in terms of economics so they can always change as they see fit.
I like the idea of clearing bond debt asap, however I feel it would also be beneficial to set the ceiling/floor price slightly above $1.05. As long as we maintain balance regarding fees and incentives with a reasonable burn (20%), It can be done and will push us into expansion. And I do agree that one day we should have a neutral zone that is no penalties or incentives +/- 5% of GMU, however we have a ways to go until then.
Perhaps $1.07 as the floor/ceiling. As you can see price won’t immediately fly to $1.07, but it is likely we will be around $1.03-$1.06 and very close to expansion once debt is clear.
Yes a higher price can boost the chances and rate of bond redemption. I’m just afraid there is downside to this change that I’m not seeing. Hence, the price can be decided by the team but we definitely need a higher one.
The downside would be more frequent system expansions, short duration contractions, more maha being burnt do to higher volumes associated with more adoption and overall more attention to MahaDao. As long as the rewards are paid for by the selling fees, we are in the clear.
As discussed in the price channel, i would again reiterate and ask the team to charge fees till 1.1 and hive rewards till 1.05.
This will be a temporary dynamic measure, invoked everytime , there is a bog dent cycle, like the current one.
This will give arth the push it needs for much awaited expansions.
Once we are there, the fees can be reduced.
If liquidity was more on Uniswap then we’d have had problems.
Moreover, this should be a temporary solution because the protocol issued way too much debt when the bonds were being gamed by bad whales. So this should clear off all the debt and start allowing for expansions to happen.
When an artificial expansion is triggered, these limits should be removed the moment we hit expansion because we don’t want to create too much artificial demand (which can cause the protocol to then have a very heavy contraction cycle and meet its real demand)
I think this is good enough for us to put up for a vote the moment we are done with AIP10; (Around Monday Feb 15th)
If this should be considered a temporary solution, I think we could do something more aggressive as suggested by @imhotep where we reward buyers below 1.05 and charge sellers below 1.1$. When this goes live, I’m guessing we can clear bond debts within a few days easily. There might be undesirable consequences to such aggressive and artificial expansions that we might not be able to see now. Nevertheless, since it is a really short term measure, I think it is acceptable for most people. So I’m favoring a more aggressive method.
I feel we should burn less Maha in the early stage of this and REALLY focus on INCENTIVES. Carrots work well and benefit all, including Maha holders. Once we jump-start ARTH expansion it will make everything easier for us, including partnerships, marketing and adoption. $1.10 as the Incentives/Fees threshold will accomplish this. We don’t have to keep things at $1.10, but for now I feel it will benefit the ecosystem tremendously. $1.05 will work but will take more time and time isn’t really in our favor. And as stated we can always scale things back after we get the fire burning again.
