Simple Summary

This SCCP proposes to apply the below configuration changes on the DAI wrapper:

• Lower the maxTokenAmounton the ethereum network from 20m DAI to 0
• Lower the burnFeeRate on the ethereum network from 50 bp to 0
• Lower the minFeeRate on the optimism network from 25 bp to 0

Abstract

• The maxTokenAmount is the maximum amount of underlying that can be locked in order to issue a synth equivalent.
• The mintFeeRate is the fee rate applied when minting a synth by locking up an underlying.
• The burnFeeRate is the fee rate applied when burning a synth in order to unlock the underlying.

Motivation

The primary motivation is to incentivize arbitrage of the imbalance between the ethereum and optimism wrappers. Over the last couple of months the optimism DAI wrapper went from having around 20m$ of DAI locked, to less than 1m$ locked at the time of writing this SCCP. With most of the sUSD activity taking place on optimism, it is important to encourage market forces to abitrage the two wrappers in order to reduce the price impact of users buying into and exiting the Synthetix ecosystem. Adjusting the parameters as laid out in this SCCP eases the friction cost and facilitate the arbitrage.

Network	Ethereum	Optimism
Peg	1.0005	0.9995
DAI Locked	20m	0.9m
Eth Locked	20k	2.8k

The arbitrage that can be done by market foces takes the following form:

1. Start with DAI on optimism / Bridge DAI to optimism from ethereum
2. Mint sUSD with DAI with the wrapper - 0% mintFeeRate - (or swap if sUSD is selling at discount)
3. Bridge the sUSD to ethereum with the relayer - blog post
4. Burn the sUSD to release DAI - 0% BurnFeeRate - (or swap if sUSD is selling at premium)
5. Back to step 1)

Copyright

Copyright and related rights waived via CC0.