Your thoughts about increasing mETH ceiling?

mETH is by far the more popular mAsset for now.
As I write this, the mETH total supply is 5000, 4998 being active/locked (and this is going on since few weeks now).

I think increasing mETH ceiling would help DMM to grow faster, as it seems there is a big demand for it.

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I tend to agree. But how much are we talking about here? By a factor of 2? By a factor of 3?

Probably should be raised to 10m. I think the admin team mentioned in a chat that 10m was the initial thought before deciding on 5m. There’s obviously demand…

Maybe this would be good to increase when releasing yield farming?

I think we can’t go wrong with mETH, 5M / 8M / 10M is fine for me

Too much exposure to a volatile asset could become a problem when the next down swing happens.
Maybe adding 1k to the ETH ceiling could be a good idea once more of the other mTokens have been minted.

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My thoughts on this are the same as my thoughts on the USDK support - implement an automated growth mechanism that will allow organic growth to a set maximum.

For example, if we start with the 5000 mETH limit and, once we hit 90% (or some other number) over a certain time frame (remains at or above 90% for X-number of days or weeks), then there is an automatic increase by another 500 mETH, to a maximum of 10000 mETH (or whatever number we want to see).

That way we could create the feeling of scarcity while actually allowing controlled growth over time to accommodate additional investments, while also limiting the risks associated with having too large of a debt ceiling.

We could also limit the automated growth of any individual asset (especially a volatile one, like mETH) by requiring a certain threshold be met by other asset types (stable coins).

For example, we could say that the cap for mETH could not be more than double the active pool of mUSDT (or all stable coins combined). That would limit a volatile class from far outstripping stable classes, while also allowing growth of all of the classes.

In a complete example, we have a cap of 5000 mETH with 4998 being locked/active. So long as the total value of all of the stable mTokens is equal to 2500 or greater mETH, we would increase the total cap of mETH by 500 coins (because we are already at greater than 90% utilization). When that increase happens, if we remain at only 4998/5500 utilization we’d remain there until both the mETH active level hit 4950/5500 AND the stable mToken activity level hit the equivalent value of 2750 ETH. When that occurred, there would be an automatic increase of 500 mETH, and so on.

Of course, those numbers above are all arbitrary and have been chosen without the level of research needed to identify the right level of growth to minimize risk while also maximizing growth. For example, the threshold could be 95% and the volatile-to-stable ratio could be 3:1 or 1.5:1.

That way we could set it and forget it for a certain period of time to allow a steady, organic growth of the DMM. And once we hit a certain, predetermined level (10000 mETH or whatever) this automated growth halts as we revisit the issue.

At that point we could modify what we’ve been doing based upon what we’ve learned and to accommodate increased growth rates due to wider adoption of DMM and increased investment. Maybe we them move to a 20000 mETH potential cap with increases of 1000 at a time and a different ratio to stable tokens… or something.

The point is that all of these things should be automated as much as possible to limit the number of times we’re revisiting this - that way we can ensure a growth over a certain period, limit downtime due to these discussions a votes, and modify the system periodically based upon lessons learned.

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Can the cashflow of current assets under management support more interest payments on potentially mooning ETH? After that, I think it depends on accepted reserve ratio of ETH eposits in the DAO (we will have to trade away some ETH deposits, and thus decrease the reserve ratio of ETH, to acquire new assets), and the risk tolerance of MMs in secondary mAsset markets during uncertain times.

The total supply of mETH was originally set at 10,000 mETH.

DMM hedges against ETH volatility by purchasing options

How will we hedge against this volatility?
The answer is derivatives, namely options contracts. Options are a financial product that gives buyers the right, but not the obligation, to buy or sell an underlying asset, at an agreed-upon price and date. The DMM Foundation will be purchasing call option contracts on ETH/USD. This effectively means we are opening up a long position to cancel out the short position we are taking from selling ETH for real world assets.*

The plan was to lower to mETH total supply to 5,000 with a proposal to adjust the debt ceilings of all mTokens & introduce USDT.

Readjusting the Debt Ceilings of mTokens
In order to support more yield-seeking users, our second proposal is to raise the total debt ceiling of the DMM Ecosystem from $10M to $20M. This would be done by readjusting the individual debt ceilings for each mToken to match user demand. As the revenue generated by the real world assets ( backing the DMM Ecosystem is higher than the interest due to mToken holders, the debt ceiling can safely rise to support more user deposits.
Once user deposits flow in, the DMMF (eventually the DMM DAO) will then be able to purchase more real world assets to raise the revenue generated in the DMM Ecosystem, which then enables the ability for the debt ceiling to be safely raised again. The debt ceiling is on a per asset basis and you can see the current values and the new proposed values.

  • mUSDC: 3,500,000 to 8,000,000 USDC
  • mDAI: 3,500,000 to 3,000,000 DAI
  • mETH: 10,000 to 5,000 ETH
  • mUSDT: 0 to 8,000,000 USDT

In summary, the debt ceiling of USDC and USDT would increase due to high levels of market-wide liquidity and increased user demand (majority of mTokens are from USDC deposits), while DAI and ETH would lower to make room for USDT and lower the Ecosystem’s risk exposure. The DMM Ecosystem is best optimized for stable value deposits, as non-stablecoin assets like ETH incur higher risk due to volatility and are generally more expensive to support than stablecoins due to the hedging exposure.

Prior to the governance dashboard being released, there was a drastic increase in price for ETH. This put DMM at an over-exposure of risk. At the time: the dashboard didn’t have a definitive release date at the time, there were essentially no activated wallets (reminder: wallets need to be activated prior to a proposal being created to prevent flash loan governance attacks), and the proposal would have taken 4 days (3 days for voting + 1 day queued) to be voted on. Due to these complications, the total supply had to be readjusted early (prior to the dashboard launch) to mitigate that risk.

Even though mETH is the most popular form of mToken currently, it isn’t actually the best option for the DMM Ecosystem.

I’d “kill” the entire mETH pair for farming, and raise the cap on mUSDC instead.

ETH is a moving variable, and it’s nothing more than a “vanity” option, which requires a lot of maintenance, and might actually impact earning dramatically during a bull market.