baoUSD can be minted from the ballast as well as by borrowing it on Bao Markets. baoUSD minted form the ballast doesn’t provide revenue for veBAO holders and aren’t easily changed, so this proposal aims to reduce the mint limit to 500k to encourage minting on Bao Markets. This will allow users who follow the protocol to mint via the ballast if they are unable to borrow the minimum of $5k on Bao Markets. Once $500k has been minted liquidity should be deep enough for those users to buy baoUSD on the market instead.
- https://etherscan.io/address/0x720282bb7e721634c95f0933636de3171dc405de#writeContract use the setcap function to change the mint limit to 500k baoUSD
- Reducing the mint cap could increase baoUSD price volatility however this risk can be mitigated by increasing the mint limit again at a later date if significant amounts of baoUSD are borrowed from Bao Markets.