QIP231: Align Fees with Market Rates

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network: All Chains
author: Benjamin.lens
implementor: Guardians
implementation-date: post approval
created: 2024-04-07

Summary

This is a proposal to increase the cost of borrowing on QiDao vaults to align the cost with that of other comparable options in DeFi.

Abstract

The proposed change the interest rate parameter to 10% on all exisiting loans, where possible. Since only V2 vaults have interest rate paratmeters, the proposal only affects those vaults. This will replace all other fees for those vaults. For vault contracts with no interest rate parameter, no changes are proposed.

Motivation

The changes to the cost of borrowing are directly connected to an increased cost of borrowing across DeFi. Below is a list of all major comparable projects and their costs of borrowing. As can be observed, QiDao fees are too low.

Aave 1-month average borrow rate for USDC

• Ethereum: 11.61%
• Base: 9.84%
• Optimism: 13.34%
• Polygon: 12.39%

GHO borrow rate without holding Aave: 10.52%

SparkDAO: 14%

Abracadabra

• Ethereum: 15%
• Arbitrum: 7-10% (plus a one-time mint fee of 1%)
• Blast: 6% (plus a one-time mint fee of 0.5%)

Inverse

• Above 16% borrow rate (estimate due to the need to buy DBR to pay interest)

Specification

Rationale

Implementation only requires changes to fee parameters.

Technical Specification

See section below.

Configurable Values

Set interest rate parameter to 10%, where possible. Set other fees to 0.