Peg Stability Measures: Changing yvDAi interest rate
Firstly, Abracadabra.money introduced peg stability mechanisms to these CDPs thanks to variable interest rates, which gets activated in times of extreme market conditions. In case of peg issues, for example, the rate can be adjusted to help incentivizing users to close open positions.
Today these mechanisms will be used to help bring MIM back to peg.
Effective immediately, our yvDAI cauldron interest rate has been increased from 0% to 1% yearly. This increase in yvdai interest rate can continue in the next days. Together, with possible increases on Stargate USDC and USDT cauldrons’ interest rates, depending on the peg.
Given the low performance of the yvdai cauldron, we recommend anyone with an open position to close it and deleverage it at your earliest convenience.
You can find a tutorial on how to deleverage Abracadabra positions here.
Do not worry if the amount of yvDAI displayed by the UI is lower than what you would expect. Difference between amount & position is worth will be found as “MIM in degenbox” which can be later withdrawn to wallet. This caused by the extreme volatility the chain and the liquidity pools are currently experiencing.
Read more about this here.
Lastly, remember that closing a position when MIM trades below one dollar produces an instant profit, while simultaneously helping the protocol obtain its peg. The user is buying cheap MIM to repay the debt, and at the same time it is rebalancing the MIM-3pool.
As previously mentioned, this set of increase in interest rates aims to act as a peg stability mechanism that will bring balance to the main MIM-3pool on curve finance. As more people close their positions. An increasing amount of MIM leaves the MIM3pool, balancing the ratio between 3crvs and MIM, and therefore its peg.
Abracadabra.money a lending platform that uses interest-bearing tokens (ibTKNs) as collateral to borrow a USD pegged stablecoin (Magic Internet Money – MIM), that can be used as any other traditional stablecoin.