CIP#XX - Decrease USDN pool A parameter to 70

Summary:

This is a proposal to decrease the A Parameter for the USDN pool from 100 to 70 over 7 days.

Abstract:

More information regarding the Amplification Parameter can be found on the Curve white paper: https://www.curve.fi/stableswap-paper.pdf

Motivation:

Due to instability in the USDN peg, this is a proposal to lower the amplification coefficient for a wider capture range. The capture range will be widened to ±1.43%.

Specification:

Set future_A for the USDN pool to 70.
Ramp over 7 days. (Unix timestamp for 14 days after proposal creation)

Poll:

DAO link

3 Likes

One of the benefits is that the pool will have healthier 3pool reserves at the same price.

1 Like

prob a good idea. lets do it

2 Likes

We will look at bundling this param change with another proposal.

2 Likes

Are we sure this is necessary? How are you calculating if the peg is being held or not? The USDN pool consistently has high volumes and generates real revenues compared to many pools so I want to make sure this doesn’t affect them negatively.

This won’t affect them negatively. USDN pool liquidity providers will have more confidence that there’ll be enough buy liquidity if they want to exit.

Volume shouldn’t be that impacted, Curve will still be the most liquid place to trade USDN.

USDN has also been trading under $0.99 for quite an extended period of time which is why this change is warranted.

1 Like

What is the average trade size in USDN pool right now? Decreasing A will increase slippage on large trades, so if the pool has large trade sizes, volume will be affected in some way.

I don’t see how changing A will affect the peg. Given current pool proportions, decreasing A will put USDN further off peg. Hopefully it would be offset by arbs adding USDN to the pool, but I don’t see how decreasing A is a solution to the peg problem in itself.

The Curve USDN pool is the most liquid place to trade USDN. Currently there is less than 5 bps of additional slippage for a $1m trade, this is way more liquidity than on waves.exchange. While decreasing A will increase slippage on some trades, on other trades slippage may be reduced (if the price drops more).

Yeah true points. Adjusting A doesn’t solve the peg problem by itself. You have to face the realities of the peg. We can’t try increasing A to try to push the price back up. Maybe that works temporarily but you increase tail risks.

And the realities of the USDN peg is that it’s more volatile and can trade in a wider range than the original A accounted for. A should be adjusted lower so that the pool doesn’t sell 3pool reserves too fast.