[PIP-031] Update parameters of all mkUSD and ULTRA collaterals

Author: Sidn3yGottlieb
Date: March 8th, 2024


Given the market condition, we would like to propose significant changes to parameters of collaterals on PRISMA. The bull market as well as the arrival of Ethena has created significant demand for stablecoins and MakerDAO are proposing to raise borrow rates to over 16% across the board.

As mkUSD peg is struggling, we believe it is important for the DAO to take immediate action to raise interest rates significantly where we can and raise mint fees on tranches where the interest rate is capped to make Prisma parameters more competitive with the wider ecosystem. ULTRA’s peg is similarly struggling which is why we propose to raise IR to 20%

We realize this presents an extreme change to parameters which we believe are justified given current market conditions. Most importantly, PRISMA emissions keep compensating heavily for the high interest rates. crvUSD borrow rates are in the high 20s, MakerDAO are now going to be over 16% and those don’t have direct incentives for maintaining an open position. As a result, it’s important we bring Prisma in line with the rest of the ecosystem.


  • Bring Prisma in line with other CDP protocols
  • Lower redemptions, help the peg
  • Avoid further pressure
  • Increase revenue


Collateral Current IR% New IR% Mint fee % New mint fee % Stable
wstETH-A 4% 4% 0.75% 5% mkUSD
wstETH-B 6% 15% 0% 0% mkUSD
sfrxETH-A 4% 4% 0.75% 5% mkUSD
sfrxETH-B 6% 15% 0% 0% mkUSD
rETH 4% 4% 0.75% 5% mkUSD
cbETH 4% 4% 0.75% 5% mkUSD
- - - - - -
weETH 6.5% 20% 1% 1% ULTRA
ezETH 6.5% 20% 1% 1% ULTRA
rsETH 6.5% 20% 1% 1% ULTRA

Recent Redemptions


mkUSD Price



To come next


If we’re going to raise interest rates, we will also increase the rates for those who deposit their minted mkUSD/ULTRA into destinations such as stability pools and stable pools. If those who allocate their stables into the stability pool, and to a lesser extent the stable pools, close their troves due to higher interest rates, it will have a less pronounced effect than the trove owners who have pressured the peg by selling their stables to leverage long different assets.

To illustrate my concern with an extreme (absurd) example, if everyone in the stability pool were to close their troves because interest rates have skyrocketed, it would not impact the peg at all, while at the same time, the total value borrowed would decrease, which would also reduce revenue earned for the DAO, lessen stable liquidity, and impact the stability of liquidations (have yet to see any meaningful ones, but bull markets tend to wick down more).

If the goal is to fix the peg, we should specifically target those who have swapped their stables to lever up, not those providing liquidity in the stability pools and, to a lesser extent, the stable pools. We could leave it to the market, but I hope the stability pool and stable liquidity providers would receive more emissions to compensate for the higher interest rates in that case.

Another question I have is if we at this point should just set the mint cap of A vaults to 0 as a means to deprecate them. The difference between proper deprecation and making those vaults useless (5% mint fee is more than a year’s worth of staking yield) is pretty thin.