Simple idea. Have a stability pool that will help to stabilise all asset types (will call this the General Stability Pool going forward). This is mainly for people who want to earn the liquidation bonus, and don’t care which asset they liquidate, as they will likely immediately sell for more VST.
Right now, renBTC stability pool is severely underfunded as emissions to the pool is too low relative to the vault size. Right now, the riskiest trove in renBTC has debt of $10k and coll. ratio of 130%, but the stability pool only has funds of $7k. Not sufficient to fully liquidate this trove. Liquity didn’t have this problem as they only have one asset to liquidate, which was ETH.
Main benefit of a General Stability Pool that covers all assets, is that funds will automatically be diverted where it’s needed most. The team doesn’t have to keep adjusting emission rates of the different vaults, to match the actual size and risk of each individual asset type.
Problems forseen with such a pool is:
- Priority
- Incentivising
Priority, is which pools to draw from first, in the event of liquidation. I believe in such a case, all funds from the specific stability pools should be depleted first, before funds from the General Stability Pool is used to liquidate. This is because the General Stability Pool is meant to be the final line of defence, so it’s funds should be reserved only for cases where the specific stability pools are dry.
Incentivising, is the portion of VSTA emissions to assign to this pool. I believe this pool should get the highest portion of emissions, as they are committed the most to defending Vesta as a whole. ETH stability pool is currently overincentivised, and does not reflect the actual size of risk of the ETH vault. Perhaps some emissions can be directed from it.