An aspect of the system that allows users to remain undercollateralised indefinitely is the c-ratio buffer. This was initially required to avoid users being slashed by rapid price drops in SNX when the original mechanism reduced fees by 25%+ if a user claimed while undercollateralised. Given that the only penalty now is a failed tx, the need for this buffer to be large has been removed. There is a limitation in the way the buffer is implemented which imposes a minimum buffer of 1% of the current c-ratio. We propose to set the buffer to this minimum of 1% which will result in c-ratios below 742.6% being blocked from claiming. We should see relatively few failed claims due to SNX price shifts, while raising the effective global c-ratio by ~10% during times of SNX price decline.
Target Threshold is used in FeePool.claimFees() https://github.com/Synthetixio/synthetix/blob/v2.11.2/contracts/FeePool.sol#L759
The owner calls FeePool.setTargetThreshold(1) this will update the FeePool.claimFees() threshold.
The calculation is as follows:
issuance ratio is currently 0.133333333333333333 a 1% buffer is 0.134666666666666666 To get the c-ratio % , we divide (1 / 0.134666666666666666 ) * 100 = 742.5742574257
Users will now need to be above 742.5742574257% to be able to call claimFees.
The buffer was implemented as a protection mechanism for slashing of fees, as fee slashing is no longer implemented there is no need for this buffer. We will keep a small 1% buffer to ensure that small price fluctuations do not lead to high fee claim failure rates.
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