# SCCP-100: Initial Parameters of ETH Wrappr

Author Kaleb Keny Implemented Governance Ethereum TBD TBD 2021-05-12

## Simple Summary

This SCCP proposes to set the initial parameters of the wrappr contract SIP-112 as follows:

• maxETH: 5k ETH
• mintFeeRate: 200 bp
• burnFeeRate: 5 bp

## Abstract

The initial parameters proposed in this SCCP will be revisited once the contract cap is utilized and on-chain arbs take place in order to fix the peg. In the long run, mintFeeRate and burnFeeRate are expected to be around 5 bp as to encourage peg arbing with the least amount of friction possible and maxETH is expected to be set significantly high enough in order to keep some capacity for increased demand for synths and offset the skew in the debt pool.

## Motivation

The initial parameters of the wrappr contract are proposed to be set as such for the following reasons:

• The maxETH parameter is set low enough as to minimize volatility on the peg and avoid situations where liquidity is drawn from Curve pools in expectations of large influx of synths. In addition, the cap is set as such, since the contract is still being battle tested against on-chain activities. The cap will be raised eventually over the next few weeks until the peg premium is resolved.

• The mintFeeRate is set as such in order for the fee pool to capture most of the arb-value. Currently curve provides around 250 bp premium for trades of sETH into ETH. Therefore, setting mintFeeRate to 200 bp will ensure that most of the value is captured by the fee pool.

• The burnFeeRate is set initially at 5 bp, which is the long-run expected fee, as this function isn't expected to be utilized initially due to the peg premium.

Copyright and related rights waived via CC0.