[BIP-15] Approve bSTBL as collateral for Bao Markets / baoUSD & Remove Fees

Abstract

Approval is needed from the community to add bSTBL as collateral for synthetics on Bao Markets.

To reduce friction when being used as collateral, this proposal also seeks to approve the removal of all fees from bSTBL

Motivation

Add bSTBL as collateral to Bao Markets

An ideal collateral for synthetics is stable / increases in value relative to synth, so that liquidations are infrequent. It is also as robust as possible so that liquidations are efficient, meaning there is deep liquidity and the token behaves as expected (low risk of depeg or hack etc).

All of the tokens making up bSTBL have been selected with exactly this in mind. USDC, DAI and RAI are widely accepted as some of the safest stable coins in the industry and the yield farms being used also prioritize safety over yield, making it ideal collateral for Bao Markets and in particular baoUSD

Remove all fees for bSTBL

Another characteristic of good collateral is that it is low friction - when market participants wish to use synthetics, it would be unfortunate if the collateral provided them with a reason not to. This is especially important when the ability to maintain a peg is effected by how efficiently the collateral can be used.

Any fees we apply to bSTBL will reduce its effectiveness for maintaining the peg of baoUSD because they are a reason for arbitrageurs not to participate. For example if there is an entrance or exit fee, that is a cost needing deducting from profits and a streaming fee provides other complications.

A smaller fee would reduce the problem, but it may make more sense to remove the completely since that is what will incentivize the most usage of our core products, hard synthetics, where fees can be collected instead.

Implementation

bSTBL will be whitelisted as collateral for baoUSD and all future synthetics on Bao Markets

bSTBL entrance, streaming and exit fees will all be set to 0%

3 Likes

Can’t wait for this to go into effect!