The protocol was last updated to the new SIP parameters a few hours ago, and it seems like it is taking effect those side effects should be considered by the community in the next meeting so that we bring the most utility out of Zero for users, the most fees rewards to stakers but also the best experience to borrowers and users in general.
As a staker, I have noticed that no new lines of credit have been open that is because the origination fee is too high.
It seems those who were opening lines of credit were opening them with higher collateral ratios and they were claiming against those with lower ratios, that in a way creates a poisonous snake biting itself, because at a certain point, only high-ratio loans would remain and as such only those would survive which gives a bad taste to all other users.
We need to observe what the Protocol does and use appropriate fee incentives, not just to keep the rewards coming but to also keep the peg at $1.
We haven’t restored the peg to $1 yet, which means the new high fees are still at work and that means we need to give it more time, once the peg is restored, we need to see if the high fees will help control the peg as well, and only consider lowering fees once we see the peg sustaining for at least a few weeks, and later try to lower the origination fee.
We need to keep both the origination and redeem fees dynamic and try to lower or increase those fees as we go to try to find the right balance, and also observe the state of the market or add that because I believe while BTC continues to go up people will try to exchange DLLR into rBTC but once the next bear market comes the contrary will happen.
Having a deppeg to the upside should be less problematic but it will still be an issue because it is a depeg even if DLLR is more valuable.
I am pretty sure there is already a conversation going around but I believe the community must seek to try to fix the Zero protocol issues as soon as possible because we can’t market something that only works half of the time.