Actually, lowering A from 100 to 50 may help bring sUSD to peg so that was correct
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I will be reading the white paper over the weekend I promise 
… I will wait back for confirmation before changing this proposal, as many confirmed to me that a higher A, will lead to a more pegged sUSD (i.e 1 sUSD ~ 1 USDC or USDT)
Increasing A factor will weaken the bonus/slippage modifiers, making it “easier” to withdraw sUSD to exit the pool and deposit USDC/USDT to enter the pool. This will probably cause the pool to grow in size from more USDC/USDT flowing in, the % of pool for sUSD will drop, but the price could very well stay the same. The Curve pools should not be relied upon to magically hold pegs for other tokens while the CRV rewards are so high. Ironically, this also means the SNX incentives for LPs are not helping their peg either.
Feels like there should be a pool with sUSD and DAI, the synthetic dollar stablecoins. They’re both over-collaterized, which limits their ability to scale with demand, unlike the fiat-backed stablecoins.
@iamaloop
Well the thing is, in the old days we were able to control the peg just fine (pre-CRV rewards) by calibrating supply of sUSD (with collateralization ratio changes) and rewards of SNX shot at the pool.
But now, that CRV is used to incentivize providing to this pool, the peg goes off quite frequently, because of the “crop” harvest. So effectively higher A factor is what I am aiming for in this proposal in order to provide more stable sUSD price to traders on snx platform regardless of the imbalances in this pool V2.
I am not so certain that consistently withdrawn sUSD is the main cause of the de-peg, rather the addition of other stables and CRV rewards. This is confirmed by looking at recent history of gauge changes accompanied by steep corrections in the peg of sUSD against other stables.
sUSD doesn’t aim in my opinion to be the defacto decentralized stable coin of the universe like MKR, as just holding sUSD doesn’t pay for the oracle fees our platform need to pay to chainlink. Rather, sUSD supply is for traders to trade with, take positions and exchange synths. The sole purpose of curve was to provide these traders with a way to enter and exit the SNX universe in a stable manner, however the externality of CRV rewards has negatively affected our control over the peg.
So, unlike the case of DAI, sUSD should normally scale with the appreciation of the price of SNX, as more demand for sUSD should be tied to more trading activity, but the your not so “honest” everyday farming has resulted in this volatility. So unlike MKR, normally controlling monetary supply and snx rewards, is sufficient to control the peg, if we didn’t have CRV, as a rise trading volume will push snx price higher and supply of synths higher (this aside from the synth loans available on the platform that can absorb abnormal shocks to synth prices).
Now finally, convincing people to lower CRV rewards shot at a sUSD v2 pool, is asking people who vote for these things to earn less (since CRV owners vote on proposals), which kind of a hard to do 
. Alright then, what else can we do in this situation, if we want to continue to use and encourage people to use CRV for the on-ramp? Adjusting the A factor seems like one thing we can experiment with.
@charlie_eth I know you meant well by changing my title to “100” to “50” from ‘100’ to ‘200’. But it seems that most of the people on snx as well as here do believe that a INCREASE in A factor will lead to more stable price of sUSD to other tokens, regardless of imbalances in the pool. So I switched it back to 100 to 200, if you please don’t mind telling me if you want to do some changes on the proposal and I’ll amend it gladly, otherwise it’ll be confusing on what I did change and what I didn’t. Other than that can you please setup a vote for me after the change is agreed on, so I can link it in the post. Thank you.
Thanks for reply, I’ll have to learn more about SNX.
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Sorry there was some confusion about the numbers, I was under the impression you had gotten it wrong.
I think discussions internally are suggesting that this would be a bad idea and could hurt sUSD more when it veers off its peg. Maybe getting a SNX dev to come and give us their thoughts would be helpful.
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mmm, can you share some of the arguments against doing this? I’ll try to shuffle the arguments between this universe and the snx universe … But from what I understood, raising the A, will lead to more pegged sUSD against other stables and potentially a more imbalanced pool, which is fine…
In the end, sUSD is not being drained from curve pool, because it has little use aside from being used for exchanging on synthetix.exchange… It can be used to farm on Curve, but that would not result in drainage…
Could make things worse for sUSD when it goes off the peg seems to be the general idea.
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Why would that be the case 
? You have to give more arguments than that for me to understand lol… What’s the scenario you’re imagining?
@KALEB Okay, so you think that it’s problematic that sUSD is above it’s peg.
Well, at least there’s a lot of sUSD liquidity currently.
If A is increased, there’d be a lot less liquidity when the peg is at 1.01, and it gets worse if the peg reaches 1.02-1.03.
Don’t you want the sUSD pool to provide healthy sUSD liquidity even when there’s deviations from the peg?
I believe with the farming falling out of fashion and having SWRV now that drains excess farming liquidity from CRV… No need to change this factor anymore, peg is just fine 
.
Okay, just saying you shouldn’t be trying to adjust A as a peg management tool.
I disagree on that… Having a pool with $150M while daily trading volume on the synthetix.exchange is less than <10% of that… well why the heck do we need to increase sUSD supply and leverage/risk on the snx system? This is clearly an imbalanced pool CRV problem which can be fixed with A factor adjustment or CRV gauge adjustment…
Anyway, I know where your vote will go, regardless of the arguments I can ever throw here… So let’s leave it at that
And while I pointed out the negatives, I am open to increasing the A factor a bit.
I just didn’t like the argument of using it as a peg management lever. Note that A is an amplification coefficient, it’ll also means, that it’ll be more aggressive at buying sUSD too. It’s dual sided, it also means that the curve pool will try to be more aggressive at propping up the sUSD peg too.
One thing to note is that LPs will have a bit more risk if sUSD depegs downwards.
sUSD will still be above the peg if A is increased. It’s possible that the sUSD price will be lowered, closer to the peg, but it’s also possible that the lower price will lead to increased demand for synths, and you end up still above the peg.
Changing the A coefficient is quite different from the CRV gauge adjustment. There’s still going to be a lot of sUSD bid pressure even if you adjust the A coefficient.
I agree that the CRV gauge adjustment is a very powerful monetary policy tool. Maybe the Synthetix DAO needs to lock up some veCRV to have a bigger influence on decisions.
@KALEB Also a big change would be a pool where the sUSD reserves are available on secondary markets. Could make a big difference.
Ok, here’s the thing.
If you increase A, there will be more liquidity in a narrower range.
If we increase A now, while SUSD is ~1.01+, it will be easier for SUSD to break out upwards.
Tldr: A higher than now makes it easier for SUSD to break the peg.
My opinion is that A=100 is fairly optimal here
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Well you know, I don’t like playing around with things this fragile, but the state of the peg was crazy, because we have a bunch of farmers drowning the pool with USDC&USDT causing an imbalance and sUSD to go off-peg… In the end, the demand for sUSD is kind of related to the exchange volume… So if we raise the A-factor, I don’t anticipate any impact on the supply of sUSD in the pool (since it is exchange volume driven) rather it’ll just allow traders to buy sUSD at reasonable prices…
Yeah if we were at a discount, probably then it’s a different matter all together…And probably would lobby for higher SNX rewards shot at the pool, higher c-ratio, more CRV shot at the pool, or lower A.
Well I did raise this on snx discord, but I don’t know who manages sDAO, probably if it was one guy that controlled a large amount of the supply, like Andre does with his pools, than we’d have much more levers. But as was seen recently, Founders of CRV can veto any decision… And I’m not sure they’d like to see lower rewards on the V2 pool, because they worry it’ll lower TVL…
@michwill
Ok from what you said, I understand that the first order derivative will be lower but then the second order derivative will be higher. Can you please clarify the scenario that would result in a break-out to occur? Like are you referring to massive draining sUSD liquidity from the pool will result in this breakout?
When A is higher, d_balance/d_price is higher, however the range where it is higher is smaller, and the current price will become out of that range if we raise A. IMO, A cannot manipulate SUSD price closer to the peg now.
A real solution could be to allow printing SUSD out of thin air for a smart contract which sells high and buys-low-and-burns. This operation would be profitable btw
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Ok that is pretty clear to me thank you.
Well I don’t think we can ever arrive at consensus as an SNX community to issue sUSD that is not backed by some form of debt (synth minting) or not tied to some locked up liquefiable collateral (synth loans), even if it was profitable to do so… But there are things being worked on to alleviate the peg pressure from snx dev side:
- Making minting/burning/claiming cheaper (even Pre-L2)
- sUSD Loans backed by ETH
- L2
But I can say the gauge plays an important role now in setting the sUSD peg. If yielded, it can set sUSD to whatever price, since it seems people automatically shift USDT/USDC to other pools depending on that factor.