The VAI Stablecoin has been unpegged for numerous months, and we are prepared to deliver a solution that will bring VAI back to its $1 peg and keep it near that level going forward.

A bug was found in the stability fee implementation proposed in VIP-80. Executing VIP-80 would have lead to increased interest for those who minted VAI in the past. The team has decided to relaunch the proposal with the corrected version of the code.

Details

Venus will introduce a stability fee to keep VAI at or near its peg via market dynamics.

An interest rate, initially set at 1%, will be charged for minting VAI. The rate will set by governance going forward. This variable rate will encourage more minting when demand is high and VAI’s price is over $1.00 while discouraging minting when demand is low and VAI’s price is below $1.00.

The stability fee will be adjusted based on a base rate, the price of VAI, and a floating rate. The stability rate is an annual rate divided by the yearly number of blocks on the BNB Chain, creating a stability rate per block.

A small stability fee for minting and burning VAI discourages users from buying and selling below or above the price of $1.00, reducing price volatility while creating value for Venus Protocol. Stability fee income will be used for handling extreme conditions such as bad debt, risk funds, and outlier events.

Before the VAI Stability Fee, a user's VAI mint limit was based on their total supplied funds without considering the collateral factor of those funds. If a user minted VAI up to the amount of their unused liquidity, they would put their account into immediate liquidation because they would have surpassed the collateral value of their supply. The VAI Stability Fee in Venus V4 allows users to only mint VAI based on their weighted supply rather than their total supply to reduce liquidations.","forDescription":"I agree that Venus Protocol should proceed and introduce VAI Stability Fee","againstDescription":"I disagree and Venus should NOT proceed and introduce VAI Stability Fee","abstainDescription":"I am indifferent to whether Venus Protocol introduces VAI Stability Fee or not"}