It is not killing the protocol. It’s governing the protocol, as SOV stakers are supposed to, in this case to protect line of credit owners from excessive redemptions. If you have any ideas for alternatives to achieve this, I’m open to suggestions!
A good comparison here is Maker DAO, which early on in the life of the protocol had a debt ceiling that restricted the amount of DAI that could be issued into circulation. Zero does not have a pre-programmed debt ceiling, but based on what we are able to observe in the market I think it is prudent for Bitocracy to impose its own limit by effectively pausing borrowing, since liquidity has been completely exhausted and new borrowing is only leading to more redemptions. If you are unfamiliar with what this means, you can read my post about redemptions from earlier this year here. (Yes, it is a problem Zero has been struggling with for a while, and hasn’t found a sustainable solution for yet.)
I didn’t mean to imply you were! I was moreso referring to stakers who would bail due to the immediate revenue implications of this SIP.
If the choices really are as I put them in my previous post, then, again, the choice is not “lose revenue → lose stakers” or “don’t lose revenue → don’t lose stakers”. If Zero redemptions continue then we are going to lose revenue and stakers either way. The question is which path is more likely to lead to recovery and growth? Allowing borrowing and redemptions to continue unabated, or pausing borrowing and allowing liquidity to recover and restarting once demand has caught up to the supply?
So I would turn the question around to people who oppose this SIP: what do you propose should be done to increase DLLR demand in the immediate/short term and slow or halt redemptions? How are you going to offset the millions of DLLR worth of borrowing we’ve seen in the last few months and would likely continue to see over the next few months? I can speak from the perspective of the contributors working full time on this and say that a lot of ideas have been tossed around, now a few of the most promising are being focused on, but since DLLR is new it takes time to build trust in this currency and so these initiatives will not have an effect overnight. The purpose of pausing borrowing is to buy time for these initiatives to yield results, for DLLR demand to grow and for liquidity and the peg to recover. If we don’t pause borrowing the redemption situation will only get worse, and by the time our DLLR demand initiatives begin yielding results it may be too late to repair the reputation of Zero (and by extension DLLR).
Yago spoke about a few initiatives in progress on the governance call yesterday that was organized to discuss this SIP. The recording should be uploaded soon. At a high level these include new distribution channels via third party integrations and finding more companies such as Exodus to hodl DLLR in their corporate treasury. So, more applications and use cases for DLLR, and more hodlers who recognize its value as a censorship resistant digital dollar.