PROP #4: Raise zSOL Stability Fee

[aperire]

PROP #4: Raise zSOL Stability Fee

Date: Jun.6th 2023

Author: Joohwan Lee

Status: Proposed

Summary

Raise zSOL stability fee (borrow interest) to 4% APR linearly across 3 weeks period (1% per week)

Motivation

Since LP Finance announced to move out of beta phase, SOL-zSOL liquidity on Saber has reached 1814 SOL ($36277 USD).
Net collateral and net borrowed value reached $20.84k USD and $18.36k.

Currently the stability fee is at 1% APR, where $183 is distributed to SOL-zSOL LPs staked on LP Finance annually. By raising the stability fee up to 4% APR, it would boost the interest to $732 yearly, which is 10% APR if $7320 worth of SOL-zSOL LPs are added.

4% APR is still a competitive rate compared to other lending protocols.

• Solend: 3.89% APR
• MarginFi: 4.27% APR

Note that LP Finance allows LTV up to 95% for LSTs, which makes our rates more attractive even if the borrow rate itself is higher.

As mSOL APY is currently at 6.62% APY, it does not create harm to existing leveraged positions.

Actions

Raise stability fee 1% APR weekly until it reaches 4% APR.

• Week 1: 2%
• Week2: 3%
• Week 3: 4%