MCCP 2: Reduce cache size to 2%
| Author | Alex Scott |
|---|---|
| Discussions-To | https://forum.mstable.org/t/mccp-2-reduce-cache-size-to-2/333 |
| Status | Implemented |
| Created | 2021-01-26 |
Simple Summary
A number of users have highlighted an issue with mint/swap/redeem. When trying to swap ‘out’ sUSD, and you will get an error “Error during estimation execution reverted: There is not enough liquidity available to redeem”.
This is due to the Cache attempting to reset the raw basket assets to the optimal levels. Aave does not have enough available sUSD to withdraw from its lending market: https://app.aave.com/markets given a high utilisation rate.
The proposed change is to reduce the cache size from 10% to 2%, to enable a smaller amount of sUSD to be withdrawn.
Abstract
The mUSD cache keeps a certain proportion of each bAsset in raw form (e.g. sUSD, not on Aave), to make mint/swap/redeem cheaper with that asset. When the cache goes to 0, it tries to reset itself to x% of total supply (in this case $1.6m USD) in raw sUSD by redeeming asUSD (read more here). There is not enough available liquidity to do this at the moment on Aave.
This is nothing to be concerned about and all funds are safe. AAVE are planning to disable borrowing, so this will mean that loans gradually get repaid and liquidity frees up.
In the short term we propose a significant reduction to the size of our cache size so that most withdrawals are unblocked.
Setting the cache to 2% would free it up and allow it to operate under relatively normal circumstances, keeping between 0-740k USD in the cache at any one time. Still supporting low gas cost transactions, but putting a larger quantity of assets into the lending market to capture yield.
Motivation
The motivation is to free up the basket and allow swaps to happen with the highly utilised assets. As such, it is quite urgent.
Copyright
Copyright and related rights waived via CC0.