# SCCP 18: Temporary iETH limits Source

Author Kain Warwick https://discord.gg/kPPKsPb Implemented 2020-04-27

## Simple Summary

We are currently running a trial incentive for holders of iETH to create a more market neutral debt pool by offseting the skew towards sETH. This trial is currently restricted due to the iETH limits which could cause iETH to be frozen preventing us from deploying a staking contract to distribute SNX to iETH holders. This SCCP proposes a temporary increase to the iETH limits to reduce the chance of iETH being frozen during the trial, thus allowing us to deploy an iETH staking pool.

The upper and lower bounds of iETH are currently pegged to an ETH price of $180.16, with a lower limit of$90.08 and an upper limit of $270.24. This SCCP proposes to change the bounds to$45.04 and $315.28. ## Motivation There is a trade-off present in the iSynths limits, the bounds are intended to ensure profit generated by holding iETH remains close to that of ETH but in the opposite direction. As ETH moves away from the pegged price iETH starts to behave more like a leveraged token, at 50%, the current lower price bound, each$1 of iETH purchased generates $2 of price movement when ETH moves$1. By increasing the limits this will shift to as high as 7x leverage. At the upper limit ETH will be $315 while it will only cost$45 to puchase one unit of iETH. This presents a risk to the debt pool as highly leveraged tokens can magnifiy changes in the debt pool. However, by increasing these limits we reduce the likelihood that iETH will hit the limits and be frozen. This will allow us to implement an iETH reward contract where iETH can be staked and SNX rewards will be distributed automatically. This will provide more confidence in the trial and more closely track the experience of other SNX incentives like the Unipool and Curvepool.

The downside to this approach is that if iETH hits the limits in spite of the wider limits we will not be able to reprice it and restart it until all iETH holders have exited the pool.

Copyright and related rights waived via CC0.