Raise interest rate multiplier in all crvUSD markets


crvUSD has dynamic interest rates. If you ignore the part which is dependent on how close the market is to being full, interest rate can be expressed as:

rate = rate0 * exp(depeg / sigma) * exp(- pegkeeper_filling / (total_debt * target_f))

with target_f = 10% currently.

Currently non-staked ETH and BTC markets have:

rate0_nonstaked = 5.8% APR

And for staked ETHs:

rate0 = 8.6% APR

Currently PegKeepers have 80M allocated, and total debt is 160M.

This means that if PegKeepers are empty (pegkeeper_filling = 0) but crvUSD is fully on peg (depeg = 0), borrow rate is going to be 8.6% max for staked ETHs.

However, if market rate is higher than that, borrowers tend to contunue borrowing which causes crvUSD to depeg. This is what is happening now with depeg = 0.5%.


I propose to increase rate0 in all markets.

For staked ETHs:

rate0 = 15%

For plain ETH and BTCs:

rate0 = 11%

(difference between both is approximately equal to ETH staking APR).

This will cause the market to repay some loans before depeg disappears, PegKeepers start filling, and rate starts dropping. These settings support borrow rates:

  • From 0.1% to 15% for staked ETHs;
  • From 0.07% to 11% for non-staked ETH and BTC.

Lower bound is achieved when PegKeepers are full, and upper bound when they are empty. When market dictates rates outside the range, crvUSD starts deviating from the peg, and another vote to change rate0 is needed.

In future, rate0 can be targeted fully algorithmically, too.