Discuss: pool limits & utilization

The USDC pool is full and DAI is close to its max as well.
I feel like we should increase stable pools x2 at least.
And maybe allow the gearbox multisig to increase pool limits without additional DAO voting to make the process more operational rather than ad hoc.

Let’s discuss possible options here. For instance, if any pool approaches 80% utilisation, the multisig to increase a limit without formal proposal:
a) by 30 %
b) by 50%
c) by 100%
d) 0% (each increase via formal proposal voting procedure only)

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Fully agree with the increase proposal. As for the %, I’d rest my case here to hear what risk committee thinks is the most viable. From the governance minimization standpoint (not to vote for every incremental move which is redundant in this case aka same activity) - also agree.

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I would go for 50% increase without proposal voting

I fully support. Perhaps it is worth stabilizing the pool in the initial stages. BTC is not so popular, it can be left alone. And USDC should be expanded as it is very popular. We should spend less time accepting such proposals. I think a great option is 50%.

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Awesome. 50% auto-increase also looks good to me. 30% is like a more conservative option but still good. 100% will be too aggressive imo.


I’d also discuss how we can adjust pools interest rate parameters. I guess, these parameters should be set so that pools utilisation goes around 60-80%…

My idea behind it:

  • remove withdrawal fee (1% now).
  • set pools parameters as:
    – U_opt = 80%
    – r_0 = 0
    – r_ 1 = 1 for WBTC, WETH pools. 2.5 for USDC/DAI pools
    – r_2 = 60.

This creates interesting mechanics:

  • Lowering r_1 increases utilisation of pools (more opportunities to yield arbitrage)
  • High r_2 protects from liquidity crisis as high organic APY increases organic growth of pool’s TVL in case of low available liquidity in pools

Wanna add some words about motivation of all of these changes:

Now utilisation of pools are:

  • 21% for DAI
  • 38% for USDC
  • 10% for WETH
  • 3% for WBTC.

Low utilisation creates high spread between borrow rate and deposit rate. The higher utilisation, the lower spread. So from product side it’s better to have utilisation close to 100%, but then LPs funds could be locked as there is no liquidity to withdraw funds. So optimal value I guess would be something close to 80%- users be able to withdraw funds, and spread still be acceptable…


Agree, good point. Too early stage to have such a fee.

U_Opt at 80% would be more sustainable, fully support that

Don’t you think r_1 for WBTC/ETH is ok-ish at the moment? I would go for equal r_1 across all the pools on ~2.5-3% level to be honest

I wanted to understand better the motivation for LP providers. Because it looks more efficient for me to open a credit account and use stable farming with leverage. It also has almost no risks, but more profitable. I already called @amantay about this and tormented him with questions.

using credit account requires a lot more attention to it: you should check your health factor, check apy of your strategy etc etc… while in pools side you can be passive liquidity providers…

This is dope but we need to find the relation between the APY and the utilisation levels of the TVLs, see at what level of utilisation we can offer competitive APYs and then take a call on increases basis if we are constantly reaching that level.

Increasing APY at low utilisation will lead to APY suffering, APY suffering will eventually lead to withdrawals, people at the moment might not be withdrawing due to the possible LM or the 1% fee

TVLs should be increased if APYs approach levels where they might skyrocket due to higher utilisation

Current metrics shows that we have PMF for leverage farming. and we should focus on making leverage farming more attractive for credit account users. now farming opportunities are only yvUSDC, yvDAI. We definitely should add more yearn vaults (dev team r working on it). But now we should put APY numbers so that lev farming on yUSDC / yDAI still make sense even for pool utilisation ~70-80%. The only way to achieve that - decrease r1 parameter for USDC/DAI as I suggested before.

Yes. That’s what I wanted to say. I support the idea. Can we motivate LP providers with GEAR earnings not based on bonus drops. Is it open in APY format? Maybe it will look more attractive. This way we can natively exchange the governance token. Without much pressure on the market. If I understand correctly. Accordingly, APY is paid to LP providers only in GEAR. And the percentage earned by majors with LP goes to the treasury. Is it possible?

I apologize in advance if I’m talking nonsense. I’m just trying to reason.

not sure, I properly understand what you mean. Could you expand a little bit your idea?

It is difficult to formulate your thoughts in English. I answered you in Telegram. I tried to be more clear.

I believe this proposal could be better structured and thought out - V2 is still a month off and utilization ratios aren’t really close to target 80%, so not clear why a limit increase should be rushed with less than a day between pre-GIP and actual voting. X2 also seems to be a somewhat arbitrary number.

I do like the rule based approach with increasing the limits each time utilization goes over 80% and the pool is close to limit. I’d rather keep that from this discussion, rather than a 2X limit increase.

I think the motivation is while users are adding liquidity to the pool without any incentives, we need to give them to do it… Fix interest rate parameters to achieve higher pool’s utilisation we can do later next week…

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I see no reasons why should we deny lp providers not to fund the pools: existing pool limits prevent onboarding new customers - that’s not good.

Utilisation ratio is small, that’s correct - there’s a discussion on the coff adjustments (see above).
I’m more for step by step approach, so we could see the isolated effects of every particular change and be prepared for v2

I’m curious who these people are, and if we have a lot of stuck people because of the 1% withdrawal fee. I don’t think we should scale up until we remove this fee or until pools actually become utilized to a point where APR is consistently > 1%. Otherwise we are just increasing the pool without knowing how many people want to withdraw when we take that action.

EDIT: Proposal is live already - I’m ok with a 2x for now but would like to consider the withdrawal fee before any more increases. I just want to be aware of the bad experience we could create for users if we have a huge pool that we think is organic, then we discontinue the fee, then a ton of the pool withdraws, making APRs higher to the point where lots of people have to re-adjust their CAM strats and pay gas to do so.

We don’t need to motivate LP providers right now as it is still quite cheap to borrow, so incentivizing more is just inefficiently paying out GEAR tokens to collect TVL with no true benefit right now.