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FiRM Spring Cleaning - Sunset Underutilized and Expired Markets

Executed
#295 - mills ERA

Created May 30th, 2025 - Executed Jun 4th, 2025

Details

avatar

Karm1

https://forum.inverse.finance/t/firm-spring-cleaning-sunset-underutilized-and-expired-markets/566/1

Summary

This proposal recommends formally sunsetting seven inactive, redundant, or expired FiRM markets by setting their market ceilings to the minimum viable amounts and pausing new borrows where needed. The markets targeted for deprecation include: DAI, FRAX, COMP, yv-DOLA/crvUSD LP, DOLA/crvUSD LP, PT-sUSDe-29MAY25, and PT-sUSDe-27MAR25. These actions are part of a broader operational cleanup initiative to streamline FiRM’s collateral roster, reduce unnecessary risk exposure, and improve protocol efficiency.

Motivation

As FiRM matures, periodic reviews of its supported collateral markets are essential to maintaining a healthy, efficient lending protocol. Several of FiRM’s earliest markets were launched during periods of experimentation or opportunistic integration and have since seen their relevance diminish. In some cases, the underlying assets have been deprecated or superseded by newer mechanisms; in others, anticipated ecosystem partnerships failed to materialize.

Sunsetting unused or low-utility markets serves multiple objectives. It removes operational overhead from the RWG, reduces the monitoring burden for oracles and liquidity, and minimizes governance surface area around parameters that no longer require tuning. From a security perspective, deprecating dormant markets also narrows the protocol’s exposure to tail risks, such as flash liquidity drains, mispriced feeds, or liquidations in low-liquidity and/or high-gas environments.

By formally winding down these markets, we reinforce our commitment to good protocol hygiene and signal to external partners and users that FiRM collateral is thoughtfully curated and regularly maintained.

Background & Rationale

DAI The DAI FiRM market was originally introduced to support users leveraging the DAI Savings Rate (DSR) for fixed-rate borrowing. However, since MakerDAO’s rebrand to Sky and strategic pivot toward its new USDS stablecoin, DAI’s incentive structure is steadily eroding. Given that the DOLA/sUSDS LP is already supported as collateral, the DAI market is now redundant and unnecessary to maintain.

sFRAX Frax Finance has officially “upgraded” the FRAX stablecoin to frxUSD, its new flagship asset for algorithmic stability and RWA integration. While 1:1 swapping between the two will be available for some time, liquidity, incentivization, and management for the old FRAX contract will inevitably trend to 0.

COMP The COMP market was initially launched with the potential for strategic alignment with the Compound ecosystem. However, those plans never advanced into actionable integrations, and market activity has remained near-zero for most of its lifecycle. Compounding the issue, on-chain liquidity for COMP has thinned considerably, making it a less reliable asset for collateralized borrowing. Continuing to monitor and support this market offers little upside and introduces maintenance risk, making deprecation the prudent choice.

DOLA/crvUSD LP & yv-DOLA/crvUSD LP The base DOLA/crvUSD LP markets have become functionally obsolete following the TWG’s decision to shift incentives toward DOLA pools on Curve paired with yield-bearing stablecoins. The sDOLA/crvUSD and sDOLA/scrvUSD LPs now represent the preferred markets. Sunsetting this market removes redundancy and supports the consolidation of DOLA liquidity around more strategic pool compositions.

PT-sUSDe-29MAY25 & PT-sUSDe-27MAR25 With both markets now expired, and the March 2025 market already paused, they no longer serve any purpose as active collateral. We recommend fully deprecating both PT-sUSDe markets as part of standard lifecycle management.

On-Chain Actions

For each market listed with no positions; setMarketCeiling = 0. Otherwise set to lowest amount accounting for active position. For each market, pauseBorrows = true

This ensures no new borrowing can occur while still allowing existing borrowers (if any) to repay their loans and exit gracefully.

Actions

Action 1
FiRM DAI Market
.pauseBorrows(

true

)

Action 2
FiRM sFRAX Market
.pauseBorrows(

true

)

Action 3
«
Set FiRM sFRAX Market Supply Ceiling to

0

DOLA
»
Fed FiRM
.changeMarketCeiling(
FiRM sFRAX Market,

0

)

Action 4
FiRM COMP Market
.pauseBorrows(

true

)

Action 5
«
Set FiRM COMP Market Supply Ceiling to

0

DOLA
»
Fed FiRM
.changeMarketCeiling(

)

Action 6

true

)

Action 7
«
Set FiRM yv-crvUSD-DOLA Market Supply Ceiling to

0

DOLA
»
Fed FiRM
.changeMarketCeiling(

)

Action 8

true

)

Action 9

true

)

Action 10
«
Set FiRM PT-sUSDe-27MAR25 Market Supply Ceiling to

0

DOLA
»
Fed FiRM
.changeMarketCeiling(

)

Action 11

true

)

Action 12
«
Set FiRM PT-sUSDe-29MAY25 Market Supply Ceiling to

0

DOLA
»
Fed FiRM
.changeMarketCeiling(

)

Action 13
«
Set FiRM DAI Market Supply Ceiling to

500

DOLA
»
Fed FiRM
.changeMarketCeiling(
FiRM DAI Market,

500000000000000000000

)

Action 14
«
Set FiRM crvUSD-DOLA Market Supply Ceiling to

60,000

DOLA
»
Fed FiRM
.changeMarketCeiling(
FiRM crvUSD-DOLA Market,

60000000000000000000000

)

Proof of Reviews

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