Proposal Summary:

In accordance with RIPs 40, 42, 43, and 44: It is proposed to gradually increase the maximum borrowing rate for RMM stablecoins by 9% APR every 15 days, starting from the current value (9.5% - RIP 42) and up to the initial maximum rate (27.5% APR).

If this proposal is rejected, the maximum stablecoin rate will remain at the current value (9.5% APR).

If both RIPs 45 and 46 are voted in favour, only the one that obtained the most votingPwer in favour will be applied.

Objectives:

To create a progressively larger interest rate differential between stablecoins and dREUSD (which are at 0% throughout Phase 1). This will encourage borrowers to repay their loans in stablecoins in order to benefit from REUSD loans at 0% (within the limits of the parameters voted on in RIP 42).

Motivation / Context:

RIP 40 voted on the operating principles of v3.5 (https://forum.realtoken.community/d/122), including:

• A "Temporary 0% Rate," followed by a "Gradual Increase in Stages": in the "Coordinated Adjustment of Stablecoin Rates" section,
• A "Temporary Reduction to 0%" and a "Gradual Increase Schedule" in the "Voting Methodology" section.

RIP 42 voted on a maximum borrowing rate for RMM stablecoins at 9.5% APR.

• The wording of this proposal is interpreted differently regarding the rate change at the indicated maturity date (v3.5 + 15 days).

RIP 44 proposed a 0% borrowing rate, but it was not accepted.

RIP 43 approved the parameters of version 3.5, including:

• A 0% rate for dREUSD until the end of Phase 1 (at least October 10th).

RIP 40 specified the exit conditions from Phase 1, including the return of liquidity to the RMM.

• A gradual increase in the participation limit per wallet (currently 200 REUSD, which will be doubled every 15 days, up to 1600 and the exhaustion of the budget allocated by the DAO).

Since May 10th, version 3.5 has been in production:

• Borrowers who wish to reduce their loan burden can convert stablecoin debt (at x%) into REUSD debt at 0%. This limits the volume of stablecoin debt available to the RMM accordingly.
• With a 100% matching rate, all stablecoins contributed during a repayment are used by the DAO and are inaccessible to bots.
• Several wallets have repaid and converted their debt, up to the maximum possible per borrower. This maximum is gradually increasing.
• The use of conversion is starting slowly, as there is a temporarily more favorable alternative: repaying in ARMM (acquired at a discount).

Plus the difference between the stablecoin and REUSD exchange rates. The more important it is, the more borrowers have an incentive to use version 3.5 to reduce their loan burden.

The 0% interest rate threshold, planned in RIP 40, having been rejected by RIP 44, it is proposed to start with the current maximum rate (9.5% - RIP 42) and gradually increase it in two stages over a period of one month to reach the initial maximum rate (27.5%).

Technical Details:

• RIP 42 set slope2 at 2%, which, added to slope1 of 7.5% (and the base of 0), makes a maximum APR of 9.5%.
• This proposal will consist of increasing slope2 by 9% every 15 days, to reach a value of 20%. This corresponds to the original RMM value. 20% slope2 added to the 7.5% slope1 (and the base of 0) makes the 27.5% maximum rate.

Implementation Stages:

• Preliminary discussions on the Forum: 7 days (suggestion + proposal stage, already in the correct format)
• Proposal submitted to a vote: 10 days (7 days of voting + 3 days for safety)
• Depending on the result, the parameters will be applied (by RealT): second half of June.

Team Involved:

• RealT (@Michael): Application of the new rate parameters for stablecoins (USDC and WXDAI)
• Proposer: Assistance in drafting the proposal and voting,
• DAO Member: Preliminary discussions on the Forum, then voting.

Budget: This proposal does not require a DAO budget.

Roadmap:

• Second half of June: The maximum stablecoin rate will have been validated again,
• Mid-July: Maximum individual participation in v3.5 (1600 REUD) will be reached,
• End of July: Version 3.5 will have its "cruising" parameters (maximum participation limit and stablecoin rate progression),
• During October: End of the minimum duration of Stage 1 of version 3.5. The transition to Stage 2 is linked to other criteria, including the return of liquidity on RMM,
• End of October: If the budget allocated by the DAO to the 3.5 program is not fully consumed, the limit per user (1600 REUSD) could be increased (via a vote).

Key Terms:

• RMM Version 3.5: Addition of features (the use of which is optional) to incentivize debt repayment on RMM through DAO participation.
• DAO Participation: During stage 1 of the v3.5 deployment, a $100 repayment in stablecoin will entitle the DAO to $50 participation (100 * 50%) to migrate stablecoin debt to dREUSD.
• RMM Debt: Two debt options will be available on RMM: One in stablecoin (at a variable rate, the maximum of which is voted on separately); and one in dREUSD at a rate of 0% during Phase 1 of the v3.5 deployment.
• Migration Program Limits: A borrower's dREUSD debt will be limited by: its repayment in stablecoin, the budget allocated to the program, the number of REGs locked (at a ratio of 2 dREUSD per REG), and a limit per wallet.
• and key terms of RIPs 40, 42, and 43.

https://forum.realtoken.community/d/135