|Network||Ethereum & Optimism|
Decrease the target collateralization Ratio for SNX stakers to 350%.
The target collateralization ratio is the ratio stakers must maintain in order to claim staking rewards. If a staker's collateralization ratio falls below the target, stakers must either provide additional collateral or pay back debt in order to reach the target ratio or forfeit all weekly rewards.
Due to an active collateralization ratio on L1 still under 350%, the increased debt which stakers will take on as a result of escrow liquidations, and recent weakness in the SNX price, this SCCP proposes to reduce the target c ratio to 350%. This will allow more stakers to continue claiming rewards, helping them to continue paying down debt and maintaining their positions. This proposal will also prevent some pressure on the sUSD peg which would be caused by stakers buying additional sUSD on the market to pay their debt.
By providing stakers a bit of breathing room and the opportunity to continue collecting sUSD fees during this shock to staker debt, stakers should be better equipped to evaluate how they will handle the debt increase and liquidate or move assets if necessary. Once sufficient time has passed, or the SNX price has increased sufficiently to bring the network collateralization ratio up without requiring any significant buying of sUSD, then the Spartan Council should consider a move back toward a 400% target collateralization ratio.
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