Since introduce a kink point into the interest rate model according to WIP-15, during the development process, we simulated the APY and APR before and after the introduction of kink point. The results are as follows:
Current APY and APR of Flash Pool（Dec 18）
| Pool | Supply APY | Supply WING APY | Borrow APR | Borrow WING APY |
|---|---|---|---|---|
| pWBTC | 0.56% | 0.83% | 5.89% | 7.35% |
| ONTd | 0.00% | 0.00% | 2.53% | 3.16% |
| prenBTC | 7.45% | 10.94% | 17.53% | 21.86% |
| pUSDC | 12.30% | 18.06% | 22.14% | 27.62% |
| WING | 27.64% | 40.57% | 32.52% | 40.57% |
| pETH | 0.48% | 0.71% | 5.58% | 6.97% |
| pDAI | 14.86% | 21.81% | 24.20% | 30.19% |
| pUSDT | 3.64% | 5.34% | 12.66% | 15.79% |
| pSUSD | 22.40% | 32.87% | 29.40% | 36.68% |
| pNEO | 8.85% | 12.99% | 18.98% | 23.68% |
| pUNI | 2.90% | 4.26% | 11.46% | 14.30% |
| ONG | 2.62% | 3.84% | 10.96% | 13.67% |
APY and APR of Flash Pool after the introduction of kink point
| Pool | Supply APY | Supply WING APY | Borrow APR | Borrow WING APY |
|---|---|---|---|---|
| pWBTC | 0.19% | 0.20% | 1.98% | 1.76% |
| ONTd | 0.00% | 0.00% | 1.00% | 0.89% |
| prenBTC | 2.29% | 2.38% | 5.38% | 4.76% |
| pUSDC | 3.74% | 3.89% | 6.72% | 5.95% |
| WING | 91.79% | 95.64% | 107.99% | 95.65% |
| pETH | 0.16% | 0.17% | 1.89% | 1.68% |
| pDAI | 4.50% | 4.69% | 7.32% | 6.49% |
| pUSDT | 1.14% | 1.18% | 3.96% | 3.50% |
| pSUSD | 42.72% | 44.51% | 56.08% | 49.67% |
| pNEO | 2.71% | 2.82% | 5.80% | 5.14% |
| pUNI | 0.91% | 0.95% | 3.61% | 3.20% |
| ONG | 0.83% | 0.86% | 3.46% | 3.07% |
We found that based on the current WING incentive distribution rules of Flash Pool (based on the WING incentive distribution rules of the Interest obtained by each asset), after the introduction of kink point, WING’s APY and APR will be abnormally high, while the APY and APR of other assets will be reduced, which will further aggravate WING’s shortfall in supply, and it will also be unfriendly to other assets, it is conducive to the balanced development of Wing’s entire project. Therefore, we propose to modify the WING distribution rules of Flash Pool. We have tried to distribute WING incentives based on Utility, Borrowed Amount and Utility*Borrowed Amount respectively. The APY and APR after introducing kink is as follows:
based on Utility
| Pool | Supply APY | Supply WING APY | Borrow APR | Borrow WING APY |
|---|---|---|---|---|
| pWBTC | 0.19% | 6.39% | 1.98% | 56.89% |
| ONTd | 0.00% | 0.01% | 1.00% | 16.31% |
| prenBTC | 2.29% | 125.68% | 5.38% | 251.26% |
| pUSDC | 3.74% | 6.84% | 6.72% | 10.46% |
| WING | 91.79% | 107.84% | 107.99% | 107.85% |
| pETH | 0.16% | 2.96% | 1.89% | 28.94% |
| pDAI | 4.50% | 152.26% | 7.32% | 210.73% |
| pUSDT | 1.14% | 49.90% | 3.96% | 147.65% |
| pSUSD | 42.72% | 9.66% | 56.08% | 10.78% |
| pNEO | 2.71% | 129.50% | 5.80% | 236.01% |
| pUNI | 0.91% | 87.05% | 3.61% | 292.01% |
| ONG | 0.83% | 110.84% | 3.46% | 394.10% |
based on Borrowed Amount
| Pool | Supply APY | Supply WING APY | Borrow APR | Borrow WING APY |
|---|---|---|---|---|
| pWBTC | 0.19% | 3.56% | 1.98% | 31.67% |
| ONTd | 0.00% | 0.01% | 1.00% | 31.67% |
| prenBTC | 2.29% | 15.84% | 5.38% | 31.67% |
| pUSDC | 3.74% | 20.71% | 6.72% | 31.67% |
| WING | 91.79% | 31.67% | 107.99% | 31.67% |
| pETH | 0.16% | 3.23% | 1.89% | 31.67% |
| pDAI | 4.50% | 22.88% | 7.32% | 31.67% |
| pUSDT | 1.14% | 10.70% | 3.96% | 31.67% |
| pSUSD | 42.72% | 28.38% | 56.08% | 31.67% |
| pNEO | 2.71% | 17.38% | 5.80% | 31.67% |
| pUNI | 0.91% | 9.44% | 3.61% | 31.67% |
| ONG | 0.83% | 8.91% | 3.46% | 31.67% |
based on Utility*Borrowed Amount
| Pool | Supply APY | Supply WING APY | Borrow APR | Borrow WING APY |
|---|---|---|---|---|
| pWBTC | 0.19% | 0.52% | 1.98% | 4.67% |
| ONTd | 0.00% | 0.00% | 1.00% | 0.02% |
| prenBTC | 2.29% | 10.40% | 5.38% | 20.78% |
| pUSDC | 3.74% | 17.77% | 6.72% | 27.17% |
| WING | 91.79% | 41.55% | 107.99% | 41.55% |
| pETH | 0.16% | 0.43% | 1.89% | 4.24% |
| pDAI | 4.50% | 21.69% | 7.32% | 30.02% |
| pUSDT | 1.14% | 4.75% | 3.96% | 14.04% |
| pSUSD | 42.72% | 33.37% | 56.08% | 37.24% |
| pNEO | 2.71% | 12.51% | 5.80% | 22.80% |
| pUNI | 0.91% | 3.69% | 3.61% | 12.39% |
| ONG | 0.83% | 3.29% | 3.46% | 11.69% |
It can be seen from the data in the above table:
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Distributing WING incentives based on Utility will make the WING APY of asset types with smaller Supply Amount very easy to increase, it is unfair for asset types with large Supply Amount. For Wing, TVL is very important, so this plan does not Not conducive to the development of Wing.
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Distributing WING incentives based on Borrowed Amount will make the Borrow WING APY of each asset consistent. This plan cannot reflect the relationship between supply and demand, and cannot stimulate the supply of high-demand assets, which will not help maintain liquidity.
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Distributing WING incentives based on Utility*Borrowed Amount will make WING APY basically the same as it is now, but because of the introduction of Kink point, APR>WING APY will be promoted when the Utility is high, and the repayment will increase Supplied Amount, and when the Utility is low, APR<WING APY , which will promote borrowing, in line with the original intention of introducing kink point.
In summary, I propose to modify the WING incentive distribution rules of Flash Pool, from the current distribution based on Interest to the distribution of WING incentives based on Utility*Borrowed Amount.