Zero Governance Call #7

I’m creating a new topic in anticipation of the next governance call.

So far, it appears that redemptions have not been slowed at all by DLLR lending and stability pool rewards. I’m beginning to realize that we really have two different markets going on. One is interested in putting DLLR to work within the Sovryn ecosystem. The other is interested in bridging out to fiat. No matter what lucrative incentives we put in place for putting DLLR to work, those who borrowed to bridge out to fiat are not interested in those incentives.

I think most borrowers don’t realize what they’re going to run into until after they borrow. I’m basing that on the number of questions I see in the Discord general channel about how to bridge out to fiat now that they have their borrowed DLLR. At that point they’ve already paid a 5% fee. It’s a sunk cost, and it’s worth it to pay the AMM premium on RBTC and further depeg DLLR so they can go ahead and get their value out of Rootstock. Of course, this leads immediately to more redemptions, and the vicious cycle continues.

We need to consider how to educate users before they borrow on what the costs are going to be to borrow and bridge out. I could probably construct some sort of dashboard, but we need a good way to get this in front of potential borrowers before they pull the trigger. The UI already has a warning about redemptions. It’s possible we could put a message there, but that might seem bloated and be ignored.

I’d like to hear community ideas on what kind of information would best convey the issue to potential borrowers and what would be the best way to get the information in front of them before they borrow.

More fundamentally, do you agree that this is a separate problem that DLLR rewards aren’t going to address effectively?


The goal is not to induce those who borrow to deposit in the stability pool. The goal is to induce Stablecoins to be imported and converted to DLLR to earn preferential yield.

Sorry, this comment about borrowers was a bit of a red herring:

It should probably be replaced with the following:

But the rest of what I said stands. We need to educate borrowers in advance about the total cost of borrowing so that we don’t over-incentivize redemptions.

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Completely agree. Also, i’m not sure the warnings are enough as they only appear when you are creating a new LoC, they are never seen again. None of the existing LoC holders will ever see these warnings. A lot of questions regarding redemptions, at least on TG, have come from users AFTER they have been redeemed against. From that, I infer they were existing LoC holders and never saw any of the warnings. (i’ve had an open LoC from the beginning of the pre-release, i’ve never seen any warnings)


This is a good reminder that existing borrowers won’t see new warnings. I hope our communication in the channels is getting the word out about these issues. Like this one:

Understanding Redemptions in Zero

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