Introducing Leverage Interest Rate to Incentivize Parrot Stability Pool

  • Stability pools to incentivize USDC and USDT liquidity for PAI
  • PAI interest rate to rise to incentivize USDC stability pool
  • The interest rate will be determined by the imbalance ratio of PAI:USDC in a stable swap pool.
  • A stable vault may have liquidation events if accrued interest dips the collateral ratio below 100.5%
  • The leverage interest rate adjustments will start on November 22nd
  • 2 weeks grace period until stable vaults liquidation is enabled on December 7th
  1. Introduce stability pools to specifically incentivize USDC liquidity for PAI
  2. The protocol will start charging a dynamic Leverage Interest Rate on PAI. These interests will pay the USDC depositors in the stability pools.

Leverage Interest Rate

  • Deposit 100 USDC into Saber to get 100 SBR UST-USDC LP
  • Deposit 100 SBR UST-USDC LP in Parrot to mint 99 PAI
  • Trade 99 PAI for 99 USDC from a USDC:PAI trading pair
  • Deposit 99 USDC into SBR to get 99 SBR UST-USDC LP
  • At this point, the leveraged farmer has 199 SBR LP from 100 starting USDC, nearly doubling the yield.
  • The leverage farmer can choose to repeat the leverage cycle

Phased Introduction of Interest Rate

  • Stable vaults liquidation penalties will be reduced to 0.1%
  • Stable vaults liquidation level will be set to 100.5%
  • 2 weeks grace period before liquidation is turned on

Summary

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Liquidity Network for Lending & Borrowing

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Liquidity Network for Lending & Borrowing

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