Interest Rate Keeper Grants Proposal

Interest Rate Keeper Proposal


Recieving Address: 0xbbFf7c2dF218839895695c6D13bbFd4AcdF8191D
AJNA Amount: 456,789

Applicant and Team Information

Applicant Name: GUNBOATs
About you and/or the team: Synthetix Ambassadors, Dune, Github

Project Information

  1. What is it?
    This is grant to fund Gelato keeper to update interest rate on selected Ajna pool.

  2. What problem is being solved, how?
    Ajna TVL has been stagnated from the launch. One of issues is that with high gas price, users are not interacting with the pool which make interest rate stuck. Staked ETH/ETH pool has interest rate under 1% and DAI pools’ interest rate is lower than recently adjusted DAI Saving rates at 15% (Link here).
    On top of lagging interest rate, having pool run out of liquidity also making depositor’s UX bad as they have to wait or liquidate borrower to get their quote token back.

  3. How will this project be a source of growth or success for Ajna? Please include a step-by-step summary of how you imagine the completed project will affect Ajna.
    Pushing interest rate to the market rate should help people deposit into the pool more. At the market or higher rate, the invisible hand of market and Ajna’s mechanism should take over.

  4. What is/are the objective(s)?

    1. Push the interest rate for Staked ETH/ETH pool on Ethereum Mainnet and Base to the market rate. (~3%)
    2. Push the interest rate of sUSDe/DAI pool on Ethereum Mainnet to the market rate. (sUSDe APY is ~67% + points program)
    3. Push interest rate of USDC Pool on Polygon to the market rate. (wUSDM is ~5%, ycUSDCA APY is 20-30%)
  5. What is/are the deliverable(s)?

    1. Web3 Function smart contract (already done, although new one might required)
    2. Interest rate updated by Gelato.
  6. What is the timeline for completing the deliverables?
    Can be anyway from a week to month, depending on gas price and market condition.

  7. What level of support do you anticipate needing through the duration of the project?
    No need for support.

  8. How often will progress reports be published to the forum?
    A Dune dashboard is coming.

  9. What are the estimated costs associated with the full completion of this project?
    Ethereum Mainnet required ~100 USDC per interaction. About $4K is going to Gelato 1Balance as funding.

  10. If applicable, How will the project be maintained after completion of the grant?
    Anyone can run their own keeper. Source code is here, although in current form it only trigger on last interaction > 12 hours and not interest rate update directly.

Additional Information

  1. How will you handle a delay in your project timeline?
  2. How will you handle a scenario where the project can’t be completed due to insufficient funding or other factors?
    Yearn could trigger interest rate update while managing their vaults.
  3. How will you handle a scenario where the project is completed, but significantly under-budget?
    Unlikely, Tx cost is just that expensive. :skull::skull::skull::skull::skull:

There are two points to make here:

  1. Gelato overhead will kill you in mainnet
    Try comparing calling directly vs calling through gelato.
    There is no time criticality to call updateInterest() and it can wait.
    I would avoid gelato and call directly.

  2. Call should be made by participants
    I am not convinced that the protocol should be updating interest rates.

Why increasing the APR is good for AJNA?
If update interest would drop the APR will you call it as well?

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It’s not too bad right now. Gelato keeper is also set to execute below 60 gwei to keep cost now. (It usually execute at ~40 gwei)

This is a temporary measure. Once it reach the equilibrium, the action of participant should take over naturally.

A market rate or better should drive people to deposit in Ajna. At current state where quote is exhausted, the protocol will take less reserves which means lower potential burn for AJNA. (Screenshot from Ajna whitepaper)

On top of that the LUP in exhausted pool is really easy to manipulate which can lead to unwanted liquidation. If the update interest is going down from the call, it would means we reached the equilibrium and has no need for keeper anymore.

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Update: Interest rate that was triggered with Gelato can be found here, with only Ethereum at the moment.

In my opinion and applying to all interest rate keeper applications, this shouldn’t be something paid for by the grants program. It is a form of arbitrage and profitable. I highly doubt a dex would pay someone to profit on price discrepancies between pools

More specifically about the synthetix community reputation. Their grants program has never approved any grant application. The application mojo recently posted how kwenta price would look if it reaches gmx volumes and showed $1000 . This post was one of two days before they dumped the price 45% with an unlock.

I say they because in that ecosystem of projects has a select few that are admins across all communities. These admins ban users across all discords. Specifically a member of our 6 person team for asking an opinion building a way so that loans could be given out on vesting rewards that take a year. this would have instantly created 30 million in USD in the ecosystem. Asking Devs for their thoughts resulted in a ban across all discord groups.

Why, because if users vest early the unvested rewards go to back to the project.

On a high, medium, and direct level, I believe funding this is in bad faith. I feel confident speaking with such confidence on this forum because the word I say are true.

Here is a sample of the grants page and to add, I did go back to attempt to find that tweet later, but it was deleted.
My teammate made a comment on it laughing about the content. I will see if it can be pulled up by url through various methods to back up that statement.

On the note of the discord statement the administrative users can be checked yourselves and there was a private dm conversation that followed attempting to be let back in. All of his comments in the discords were deleted

This is going off-topic now but let me answer it once.

No, this is not setting up borrower to take advantage of rate mismatch. And even if it is, many pool is fully borrowed so you can’t do that anyway. The lender need to actively raise the rate by executing a lot of transactions.

Have you seen yearly Kwenta price? Mojo isn’t single-handedly caused that for sure.

We employed antispam bot because they usually attacked multiple server at once. If you believe it’s error we can always unban you.

Are you talking about Synthetix or Kwenta? Synthetix does not have early vest and you can always borrow (stake) from that. Kwenta has early vest fee that goes back to treasury.

As for Grants Council itself, it is getting rework as we speak. I do not have position in GC but did receive retroactive grants for Synthetix + Gelato intergration and Dune SQL works.

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I’m in support of this.
The reality is that today pools often get maxed out, due to yield farming and favorable rates, which stifles the organic activity in the pool which under normal circumstances would update the rates on an ongoing basis.
This happens because in the situation of a max borrowed pool there can be no more borrowing, or withdrawal of liquidity and because the rates are not updated, this also disincentivizes providing more liquidity (because rate is low), or repayment of loan (because the rate is favourable). This creates a situation where the organic activity that should update rates does not happen because of low incentives for both LPs and borrowers. This forces LPs to spend quite a high amount of gas to manually update rates, which makes LPing even less attractive. Ensuring LPing is effective and attractive is alpha omega for a lending protocol.
This initiative will help ensure rates are correctly updated in the short term until markets are sufficiently bootstrapped and have enough volume to automatically update rates on an ongoing basis. I believe this is a short term issue due to Ajna being a nascent market. This initiative should over time basically pay for itself, as higher rates will ensure higher AJNA burn that will offset the cost of this initiative. In fact, not updating the rates are actually potentially costing Ajna money.
Furthermore, it will be easy to just shut if off, if it does not have the desired effect. Ensuring a good UX and correct rates and thus correct incentives for users in the short term to bootstrap the markets and facilitate the growth of the protocol is definitely worth it.

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