This is a design proposal for a new type of Vault, a public Vault that has multiple users who all use the same Collateralization Ratio.
The existing Vault design currently means all Vaults are owned by individual accounts. These individual Vaults
- are created permissionlessly,
- increase the size of the chain state with every new user,
- aren’t transferable,
- and offer an individually tailored Collateralization Ratio that can be adjusted by the user at any time.
Adding a small set of public Vaults would give users an option that lacks that fine-grained control and flexibility, but unlike existing individual Vaults, public Vaults
- have their creation permissioned;
- don’t increase chain state size with every new user;
- are tokenized as ERTP tokens, allowing ownership to be transferred over IBC throughout the interchain, instead of remaining bound to a particular account on Agoric.
To offer all token holders in a given public Vault a uniform experience, the IST-to-collateral ratio cannot be adjusted by users, and evolves over time.
Public Vaults and individual Vaults can potentially charge different mint fees to encourage adoption of Public Vaults and disincentivize the creation of individual Vaults for all but those users who really require the precise flexibility they offer.
The gritty details
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A public Vault’s Collateralization Ratio is configured at (permissioned) creation time. From that point forward, the CR is allowed to naturally fluctuate, shifting as the Vault’s IST debt grows and the collateral value rises and falls. IST debt cannot be paid off without withdrawing collateral, and new collateral cannot be deposited without minting new IST debt.
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Users can select from among a few different public Vaults, each with its own CR and collateral type.
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Depositing collateral in a public Vault mints an equivalent amount of collateral claim tokens representing a user’s claim on the deposited collateral in that specific Vault, while at the same time minting a fixed amount of IST (rounded down to the nearest e.g. 10 IST) determined by the Vault’s current Collateralization Ratio. Rounding down at minting time may cause a slight rise in the Vault’s CR, slightly benefiting existing Vault users.
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Along with the minted IST, the user’s fungible collateral claim tokens can be bridged to another chain, where ownership of the tokens can be held directly by e.g. that foreign chain’s Community Pool, a DAO’s treasury, or some other custody arrangement unavailable on the native Agoric chain.
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Collateral is withdrawn from a public Vault by redeeming the collateral claim tokens and paying off a proportionate amount of the Vault’s IST debt, requiring simultaneously burning the tokens alongside the required amount of IST (rounded up to the nearest e.g. 1 IST), as determined by the Vault’s current Collateralization Ratio. Rounding up at burning time may cause a slight rise in the Vault’s CR, slightly benefiting the remaining Vault users. Rounding up also ensures the amount of IST required to withdraw a given amount of collateral is predictable, rarely changing between the time an RPC server was queried and the time the transaction is processed.
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Vault-to-Vault conversion: The direct, atomic conversion of one public Vault’s collateral claim token into another public Vault’s, without ever needing to fully pay off all debt and withdraw the collateral outright. A simple flash loan allows paying off the old IST debt before closing the flash loan with the newly minted IST debt, leaving the user responsible only for the difference between the two. Moving collateral to a public Vault with a higher Collateralization Ratio (i.e. with a lower IST debt) requires burning IST to pay off the net difference between the two, while moving collateral to a public Vault with a lower Collateralization Ratio will do the opposite and mint the user new IST. This Vault-changing becomes roughly equivalent to the existing UX of paying down or minting more debt in an individual Vault - the user always has a choice of a few different ratios to raise or lower their debt to.