# MIP-21┃Adjust Tokens Collateral Parameters for paUSD on Ethereum

**URL:** <https://gov.parallel.best/t/mip-21-adjust-tokens-collateral-parameters-for-pausd-on-ethereum/322>\
**Category:** Approved PIPs\
**Created:** [December 18, 2023, 1:26pm UTC](https://gov.parallel.best/t/mip-21-adjust-tokens-collateral-parameters-for-pausd-on-ethereum/322 "2023-12-18T13:26:57Z")\
**Posts on this page:** 3\
**Page:** 1

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**Author:** ![JeanBrasse](https://dub1.discourse-cdn.com/flex005/user_avatar/gov.parallel.best/jeanbrasse/32/28_2.png) [@JeanBrasse](https://gov.parallel.best/u/JeanBrasse)\
**Post date:** [December 18, 2023, 1:26pm UTC](https://gov.parallel.best/t/mip-21-adjust-tokens-collateral-parameters-for-pausd-on-ethereum/322/1 "2023-12-18T13:26:57Z")

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**Summary:**

This proposal aims to adjust tokens collateral parameters for paUSD on Ethereum.

**Context:**

Following last month’s market changes (tokens liquidity, volatility, global interest rates raises, increased transaction costs on Ethereum) we propose an adjustment of the parameters of tokens allowed as collateral for paUSD on Ethereum to fit with updated risk parameters and global market conditions.

**Rationale:**

Below are the current collateral parameters for token allowed as collateral for paUSD on Ethereum:

 ![](https://europe1.discourse-cdn.com/flex005/uploads/mimo1/original/1X/18414b39d7cf34c65079e0574ee67898df1efb93.png)  
(More details available [here](https://docs.google.com/spreadsheets/d/1Dk2b-F7TPtqh5ej0ko-u8aEMteoaeuwp-jfG6gqisJY/edit?usp=sharing))

We propose to adjust collateral parameters as follows:

 ![](https://europe1.discourse-cdn.com/flex005/uploads/mimo1/original/1X/5c05e6bb369ac433940facc6970212a6e4053e6d.png)  
(In blue the proposed changes, more details available [here](https://docs.google.com/spreadsheets/d/1Dk2b-F7TPtqh5ej0ko-u8aEMteoaeuwp-jfG6gqisJY/edit?usp=sharing))

Proposed Changes Summary:

- Minimum Collateral Ratio (MCR) / Liquidation Ratio (LR) / Liquidation Bonus (LB) / Debt Limit: In order to properly adjust minimum collateral ratios of all assets allowed as collateral for paUSD on Ethereum we implemented the LTV calculation [formula](https://github.com/Risk-DAO/Reports/blob/main/a-smart-contract-ltv-formula.pdf) theorized by [RiskDAO](https://riskdao.org/). The proposed formula:  
 ![](https://europe1.discourse-cdn.com/flex005/uploads/mimo1/original/1X/6a62df990a573a4e87f504bdd2c07f74cfe3f6d4.png)

- Where:

You can find detailed calculations for each asset [here](https://docs.google.com/spreadsheets/d/1k-mKaRyvqEjjovoqsFSfWQ_FpoHWSj45PYcpcfXgT4A/edit?usp=sharing).

- Initiation Fee (IF): No changes proposed.
- Borrow Rate (BR): Following recent market changes, creating increased demand for stablecoins, and a global increase in stablecoin borrowing rates (cf. [GHO](https://app.aave.com/markets/?marketName=proto_mainnet_v3) → 5.36%, [crvUSD](https://crvusd.curve.fi/#/ethereum/markets) → 5%, etc.), we propose to increase interest rates for non-productive tokens to 1.80% per annum, and at least 2.10% per annum for productive tokens (more details [here](https://docs.google.com/spreadsheets/d/1aDkVYgdJM9MwUeJuRhGEYpY2rYB6Ls4MNjeCwWr4nlg/edit?usp=sharing)).

**Means:**

- Human Resources: Multisig signers will need to sign and execute transactions to adjust tokens collateral parameters for paUSD on the Ethereum Multisig.
- Treasury Resources: There is no cost for the treasury to adjust tokens collateral parameters for paUSD on Ethereum.

**Technical Implementation:**

- In the ‘ConfigProvider’ [contract](https://etherscan.io/address/0x3E0F4aC1Be8F494b7C1AC445192B9099700e5A27#code) call the function ‘SetCollateralConfig’ for each token where changes are needed with approved parameters. (USDC, wETH, wBTC, CRV, BAL, AAVE, LINK, SUSHI, wstETH, wUSK, wFRK, RAI, LUSD, cbETH)

**Voting Options:**

- For the adjustment
- Against the adjustment
- Abstain

Author: @jeanbrasse & @Starny from Mimo Labs.

**Community poll:**

_Poll ([view on site](https://gov.parallel.best/t/mip-21-adjust-tokens-collateral-parameters-for-pausd-on-ethereum/322/1))_

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**Author:** ![starny](https://dub1.discourse-cdn.com/flex005/user_avatar/gov.parallel.best/starny/32/32_2.png) [@starny](https://gov.parallel.best/u/starny)\
**Post date:** [January 2, 2024, 9:44am UTC](https://gov.parallel.best/t/mip-21-adjust-tokens-collateral-parameters-for-pausd-on-ethereum/322/2 "2024-01-02T09:44:34Z")

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The vote is now live on Snapshot:  
[https://snapshot.org/#/mimo.eth/proposal/0x65cf84d3dd3c0efafc7c1df373a89318976cc59b6419e69e694f87de3f2510a0](https://snapshot.org/#/mimo.eth/proposal/0x65cf84d3dd3c0efafc7c1df373a89318976cc59b6419e69e694f87de3f2510a0)

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**Author:** ![starny](https://dub1.discourse-cdn.com/flex005/user_avatar/gov.parallel.best/starny/32/32_2.png) [@starny](https://gov.parallel.best/u/starny)\
**Post date:** [January 10, 2024, 3:07pm UTC](https://gov.parallel.best/t/mip-21-adjust-tokens-collateral-parameters-for-pausd-on-ethereum/322/3 "2024-01-10T15:07:11Z")

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The proposal has been approved and executed:  
[https://snapshot.org/#/mimo.eth/proposal/0x65cf84d3dd3c0efafc7c1df373a89318976cc59b6419e69e694f87de3f2510a0](https://snapshot.org/#/mimo.eth/proposal/0x65cf84d3dd3c0efafc7c1df373a89318976cc59b6419e69e694f87de3f2510a0)