CIP#27 - Increase renBTC pool A Parameter to 200

Proposals
#1

Summary:

This is a proposal to increase the A Parameter of the renBTC pool from 125 to 200 over 5 days.

Abstract:

Users can look into the Amplification Parameter on the Curve white paper at this address: https://www.curve.fi/stableswap-paper.pdf

Motivation:

Raising the A value will offer more BTC liquidity in the ±0.5% capture range. This could result in higher liquidity utilization of the renBTC pool.

The renBTC/WBTC pair has been trading much closer to the 1.0 peg. Strong arbitrage loops makes it less likely for it to trade off peg. Which is why I propose to be more aggressive with the A parameter to increase liquidity in a tighter capture range.

Specification:

Please note the potential vulnerability during A param decrease disclosed only affects older pools which do not have a rampable A parameter (https://medium.com/@peter_4205/curve-vulnerability-report-a1d7630140ec).

125 to 200 for the renBTC pool.
Ramp over 5 days (Unix timestamp for 12 days after proposal creation.

Poll:

https://dao.curve.fi/vote/parameter/8

2 Likes
#2

The team supports this proposal. The DAO vote will be added shortly.

#3

CIP #17 passed unanimously less than a month ago and it raised A on the renBTC pool from 100 to 150 (not 125). This raises three questions:

  1. What was the impact of this prior change? By how much did trading volumes increase? Did renBTC pool participants benefit from this change? (It seems like yields have collapsed in the pool).
  2. Why is this now being proposed as a change from 125 to 200 and not 150 to 200? Was CIP #17 not fully implemented?
  3. Why is 200 the right number and not some other number? What happens if A is 175? What happens if A is 2,000 or 20,000?
#4

I initially proposed the change from 100 to 125. It was a mix of caution and because of renBTC trading 30 bps below 1.0. One big change is that renBTC is trading closer to the peg, 10 bps below the peg.

As stated in the CIP, 200 was chosen to tighten the capture range to ±50 bps. I’m still a bit cautious in case spreads widen, there could be supply or demand shocks. We do have a bit of safety, as there’ll still be the sbtc pool to do renBTC/wBTC market making if the peg slips out of the ±50 bps capture range.

So my way of choosing the ‘right number’, you want there to be a high likelihood for the pair to stay within the capture range. You also look at the more normal trading fluctuations.

An A of 2,000 has a capture range of 5 bps which is much too small. I was also thinking of an A of 175. That has a capture range of 57 bps, but I ‘feel’ that it’s fine to be a bit more aggressive and ±50 bps is safe enough.

It’s harder when there’s not that’s much historical data, and it’s hard to tell how much the pair will fluctuate.

1 Like
#5

Questions and answers are very informative.

  • Ramp up A ends on: 30/09/2020 11:41:03
#6

Just to confirm one thing: Setting A to be 200 is actually setting the amplification parameter to be 100, right? When I check the code, A seems to be “amplification parameter” * n ** (n-1), so in renBTC pool, A is 2 times the amplification parameter.

1 Like