Proposal for Optimizing ARB Market Parameters on Paribus
Dear Paribus Governance Forum,
After a meticulous analysis of market dynamics and outcomes, the Paribus team is excited to propose a groundbreaking initiative to set new market parameters for the ARB Market on our platform. Our goal is to differentiate ourselves from competitors and create a more dynamic and responsive ecosystem.
Challenges and Considerations:
Converging supply and borrow rates is a complex task, given the interdependence of supply, borrow, total deposits, total borrow, and total reserves. While maintaining total deposits and reserves as constants, we propose a strategic adjustment by initially lowering the borrow Annual Percentage Yield (APY) to stimulate borrowing activity. Although this might lead to a temporary reduction in earning APY, the subsequent increase in borrowing activity is expected to normalize the rates over time.
Current ARB Parameters:
New ARB Parameters:
New Utilization Rate:
Below are the proposed utilization rate parameters for ARB, showcasing the corresponding Borrow Rate (Annual) and Supply Rate (Annual):
- Utilization Rate: 23% - Borrow Rate: 1.45%, Supply Rate: 0.26%
- Utilization Rate: 24% - Borrow Rate: 1.51%, Supply Rate: 0.29%
- Utilization Rate: 25% - Borrow Rate: 1.57%, Supply Rate: 0.31%
- Utilization Rate: 26% - Borrow Rate: 1.64%, Supply Rate: 0.34%
- …
- Utilization Rate: 40% - Borrow Rate: 2.53%, Supply Rate: 0.80%
- Utilization Rate: 41% - Borrow Rate: 2.86%, Supply Rate: 0.93%
- Utilization Rate: 42% - Borrow Rate: 3.18%, Supply Rate: 1.06%
- Utilization Rate: 43% - Borrow Rate: 3.51%, Supply Rate: 1.19%
- …
- Utilization Rate: 60% - Borrow Rate: 9.24%, Supply Rate: 4.33%
- Utilization Rate: 61% - Borrow Rate: 9.59%, Supply Rate: 4.57%
- Utilization Rate: 62% - Borrow Rate: 9.93%, Supply Rate: 4.81%
- Utilization Rate: 63% - Borrow Rate: 10.28%, Supply Rate: 5.06%
- …
- Utilization Rate: 95% - Borrow Rate: 22.05%, Supply Rate: 16.35%
- Utilization Rate: 96% - Borrow Rate: 22.44%, Supply Rate: 16.82%
- Utilization Rate: 97% - Borrow Rate: 22.83%, Supply Rate: 17.30%
- Utilization Rate: 98% - Borrow Rate: 23.22%, Supply Rate: 17.78%
- Utilization Rate: 99% - Borrow Rate: 23.61%, Supply Rate: 18.28%
- Utilization Rate: 100% - Borrow Rate: 24.00%, Supply Rate: 18.78%
Conclusion:
By strategically adjusting the borrow APY, we aim to enhance the overall competitiveness and attractiveness of the Paribus ARB Market. This proposal seeks to strike a balance between enticing borrowing activity, maintaining competitive rates, and fostering a sustainable and thriving ecosystem.
We welcome feedback and discussion from the Paribus community to collectively shape the future of our platform.
Sincerely
Paribus Team