[PIP-009] Increase Max Debt for sfrxETH to $50m

Title : Increase Max Debt for sfrxETH to $50m
Author : Charlie
Date : 22-11-2023


As the max debt from sfrxETH has reached the 33m mkUSD limit, we propose to increase the max debt for this collateral to 50M.


This proposal seeks feedback from the Prisma community to increase the max debt for sfrxETH.


Frax previously received a good risk report from PrismaRisk team highlighting the lack of support for withdrawals which have been deployed recently by the Frax team on mainnet. As Prisma governance process can take a while, I’d like to submit this proposal for a snapshot with the expectation that withdrawals would be supported by the time it concludes.
On top of this, liquidity for sfrxETH has grown steadily on Curve and other DEX allowing for a higher cap.


function setParameters(
        uint256 _maxSystemDebt to 50000000000000000000000000

Proposal to be updated with full call data.

Supporting arguments:

Liquidity on Curve and other DEXes below in past 30 days:

Source: Dex.guru

sfrxETH risk matrix

Benefits (Pros):

Increase mkUSD supply from sfrxETH

Downside (Cons):

Setting max debt from sfrxETH too high can increase the risk of destabilizing the protocol during extreme market events that deplete mkUSD in the stability pool.


Coming soon


While I have nothing against raising the sfrxeth mint cap in particular, I don’t think it’s the right time to be raising any mint caps.

If anything I think we should be lowering or freezing caps in order to get a better handle on the mkusd peg and then slowly raise the caps from there as explained in this other thread: [RFC] Peg keeping mkUSD - #2 by JonisJon


I’m not sure I understand the correlation between a cap lift and the peg?

The point here is not let a collateral be near its cap when there is demand and mint rewards are large.

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More minting causes more peg pressure (due to selling of what is minted) - if we want to contain the peg we need to contain minting for a period of time.

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Redemptions on Frax are live

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