MIR-32┃Adjust PAR Borrow Rates on Ethereum & Polygon PoS

Integration Request (PIR) Approved PIRs
1

Summary:
This proposal aims to adjust PAR borrow rates on Ethereum & Polygon PoS.

Rationale:
Following MIP-19, MIP-20, MIP-21 & MIP-22, which raised minimum borrow rates to 1.80% per year in line with recent market conditions changes (ECB rates increased, main CDP borrow rates increase), we propose to continue in this direction by increasing minimum borrow rates to 4.20% per year. This will help both adjusting demand/offer (PAR peg) and increasing protocol revenues. Moreover, protocol revenues from PAR borrow rates would grow from around $120k per year to $285k.

Below are the current borrow rates for tokens allowed as collateral for PAR on Ethereum:

1218×804 77.5 KB

(More details available here)

We propose to adjust borrow rates for tokens allowed as collateral as follows:

1220×808 73.6 KB

(In blue the proposed changes, more details available here)

Below are the current borrow rates for tokens allowed as collateral for PAR on Polygon PoS:

1220×682 79.5 KB

(More details available here)

We propose to adjust borrow rates for tokens allowed as collateral as follows:

1220×682 84.3 KB

(In blue the proposed changes, more details available here)

Means:

  • Human Resources: Multisig signers will need to adjust PAR borrow rates on Ethereum & Polygon PoS Multisigs.
  • Treasury Resources: There is no cost for the treasury to adjust PAR borrow rates on Ethereum & Polygon PoS.

Technical Implementation:

On Ethereum, Parallel DAO multisig will call following smart contracts:

  • PAR ConfigProvider contract:
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0xa0b86991c6218b36c1d19d4a2e9eb0ce3606eb48 (USDC)
      • ‘_borrowRate’ : 1000000001304602465690389264 (4.20% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0xc02aaa39b223fe8d0a0e5c4f27ead9083c756cc2 (wETH)
      • ‘_borrowRate’ : 1000000001304602465690389264 (4.20% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0x2260fac5e5542a773aa44fbcfedf7c193bc2c599 (wBTC)
      • ‘_borrowRate’ : 1000000001304602465690389264 (4.20% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0xD533a949740bb3306d119CC777fa900bA034cd52 (CRV)
      • ‘_borrowRate’ : 1000000001304602465690389264 (4.20% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0xba100000625a3754423978a60c9317c58a424e3d (BAL)
      • ‘_borrowRate’ : 1000000001304602465690389264 (4.20% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0x7fc66500c84a76ad7e9c93437bfc5ac33e2ddae9 (AAVE)
      • ‘_borrowRate’ : 1000000001304602465690389264 (4.20% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0x514910771af9ca656af840dff83e8264ecf986ca (LINK)
      • ‘_borrowRate’ : 1000000001304602465690389264 (4.20% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0x6b3595068778dd592e39a122f4f5a5cf09c90fe2 (SUSHI)
      • ‘_borrowRate’ : 1000000001304602465690389264 (4.20% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0x7f39c581f595b53c5cb19bd0b3f8da6c935e2ca0 (wstETH)
      • ‘_borrowRate’ : 1000000001395766281313196628 (4.50% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0xaf4ce7cd4f8891ecf1799878c3e9a35b8be57e09 (wUSK)
      • ‘_borrowRate’ : 1000000001395766281313196628 (4.50% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : not yet deployed (wFRK)
      • ‘_borrowRate’ : 1000000001395766281313196628 (4.50% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0x03ab458634910AaD20eF5f1C8ee96F1D6ac54919 (RAI)
      • ‘_borrowRate’ : 1000000001304602465690389264 (4.20% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0x5f98805A4E8be255a32880FDeC7F6728C6568bA0 (LUSD)
      • ‘_borrowRate’ : 1000000001304602465690389264 (4.20% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0xBe9895146f7AF43049ca1c1AE358B0541Ea49704 (cbETH)
      • ‘_borrowRate’ : 1000000001395766281313196628 (4.50% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0xae78736cd615f374d3085123a210448e74fc6393 (rETH)
      • ‘_borrowRate’ : 1000000001395766281313196628 (4.50% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0xac3E018457B222d93114458476f3E3416Abbe38F (sfrxETH)
      • ‘_borrowRate’ : 1000000001395766281313196628 (4.50% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0x6B175474E89094C44Da98b954EedeAC495271d0F (DAI)
      • ‘_borrowRate’ : 1000000001304602465690389264 (4.20% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0x853d955acef822db058eb8505911ed77f175b99e (FRAX)
      • ‘_borrowRate’ : 1000000001304602465690389264 (4.20% p.y)

On Polygon PoS, Parallel DAO multisig will call following smart contracts:

  • PAR ConfigProvider contract:
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0x2791Bca1f2de4661ED88A30C99A7a9449Aa84174 (USDC.e)
      • ‘_borrowRate’ : 1000000001304602465690389264 (4.20% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0x7ceB23fD6bC0adD59E62ac25578270cFf1b9f619 (wETH)
      • ‘_borrowRate’ : 1000000001304602465690389264 (4.20% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0x1BFD67037B42Cf73acF2047067bd4F2C47D9BfD6 (wBTC)
      • ‘_borrowRate’ : 1000000001304602465690389264 (4.20% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0x172370d5Cd63279eFa6d502DAB29171933a610AF (CRV)
      • ‘_borrowRate’ : 1000000001304602465690389264 (4.20% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0x9a71012B13CA4d3D0Cdc72A177DF3ef03b0E76A3 (BAL)
      • ‘_borrowRate’ : 1000000001304602465690389264 (4.20% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0xD6DF932A45C0f255f85145f286eA0b292B21C90B (AAVE)
      • ‘_borrowRate’ : 1000000001304602465690389264 (4.20% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0x53E0bca35eC356BD5ddDFebbD1Fc0fD03FaBad39 (LINK)
      • ‘_borrowRate’ : 1000000001304602465690389264 (4.20% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0x0b3F868E0BE5597D5DB7fEB59E1CADBb0fdDa50a (SUSHI)
      • ‘_borrowRate’ : 1000000001304602465690389264 (4.20% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0x8f3Cf7ad23Cd3CaDbD9735AFf958023239c6A063 (DAI)
      • ‘_borrowRate’ : 1000000001304602465690389264 (4.20% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0x03b54A6e9a984069379fae1a4fC4dBAE93B3bCCD (wstETH)
      • ‘_borrowRate’ : 1000000001395766281313196628 (4.50% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : not yet deployed (wUSK)
      • ‘_borrowRate’ : 1000000001395766281313196628 (4.50% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0x01d1a890D40d890d59795aFCce22F5AdbB511A3a (wFRK)
      • ‘_borrowRate’ : 1000000001395766281313196628 (4.50% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0x0d500B1d8E8eF31E21C99d1Db9A6444d3ADf1270 (wMATIC)
      • ‘_borrowRate’ : 1000000001304602465690389264 (4.20% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0x3A58a54C066FdC0f2D55FC9C89F0415C92eBf3C4 (stMATIC)
      • ‘_borrowRate’ : 1000000001395766281313196628 (4.50% p.y)
    • Call ‘SetCollateralBorrowRate’ function with these parameters:
      • ‘_collateralType’ : 0xfa68FB4628DFF1028CFEc22b4162FCcd0d45efb6 (MaticX)
      • ‘_borrowRate’ : 1000000001395766281313196628 (4.50% p.y)

Voting Options:

  • For the adjustment
  • Against the adjustment
  • Abstain

Author: @jeanbrasse & @Starny from Mimo Labs.

Community poll:

  • For the adjustment
  • Against the adjustment
  • Abstain
0 voters
2

Hello
May I kindly ask why we want to increase the B/R further? Because we have already raised two weeks ago.
Are we for example awaiting a bigger inflow of capital and therefore need to ensure that there is sufficient over-collaterisation to ensure the peg in difficult market conditions?
Maybe we could also display our low B/R in comparison to others and raise visibility for our protocol and pool?

2 Likes
3

Hey,
increase borrow rates isn’t a question of overcollateralization, by design the protocol is overcollateralized, regardless of borrow rates. Its related to market conditions, with the recent crypto prices increasing, users are once again seeking exposure to cryptos, and therefore leverage (borrow rates on Aave and Curve are currently around 15% APR on USD stablecoins). The market demand for leverage increased the PAR supply which began to depeg the price of PAR against EUR (it cost less to borrow and leverage on Parallel than on any other protocol right now). In order to maintain the PAR peg and reduce selling pressure, we propose to increase borrow rates.
This would also increase yearly protocol revenues from borrow rates from $120k to around $285k.

2 Likes
4

Appologize, I mixed up something there.
Thank you for clarification.

2 Likes
5

Vote is live: Snapshot

1 Like
6

The proposal has been approved by the DAO, result: Snapshot

1 Like