IIP-37 BTC2x-FLI Parameter Update

Governance Proposal
1

iip: 37
title: BTC2x-FLI Parameter Update
status: Proposed
author: Pulse.inc
created: 2021-04-28

Simple Summary

Update BTC2x-FLI parameters to better manage risk

Abstract

Adjust the following parameters on the BTC2x-FLI:
Tighten hard rebalance window from 1.7-2.3 to 1.8-2.2
Increase recentering speed from 5% to 10%

Motivation

Before launching BTC2x-FLI, and taking into account the recent market volatility, we have decided to tighten the parameters on the product to better protect the asset from liquidations, this is mainly due to Compound’s collateral factor difference between ETH (75%) and wBTC (65%).

The change would trigger the product to rebalance on a tighter margin and it will be able to recenter towards its target leverage (2x) at a faster rate.

Option To Extend

We anticipate future IIPs will be required to update other parameters to the BTC2x-FLI.
Some parameters that may be updated in future IIPS are:

  • Supply cap
  • Max trade size
  • Rebalancing Exchange venue
  • Rebalance bot whitelist
    More details on FLI strategy parameter updates can be found here.

Voting

  • FOR - Adjust the hard rebalance window bounds from 1.7 - 2.3 to 1.8 - 2.2 for the BTC2x-FLI. Increase the recentering speed from 5% to 10% for the BTC2x-FLI.

  • AGAINST - Do not adjust BTC2x-FLI parameters.

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