MGP-13: Increase Circuit Breaker to 15bps and Enable 5bps Spread Fee

Governance
1

TL;DR

This proposal enables a 5bps (0.05%) spread fee and increases the ValueDeltaBreaker circuit breaker thresholds from 10bps to 15bps (0.10% → 0.15%) for the following pairs:

  1. USDm/USDC
  2. USDm/axlUSDC
  3. USDm/USD₮

The goals are to reduce breaker-induced downtime, improve protection against arbitrage losses, and enable protocol revenue on high-volume pairs.

Summary

This proposal updates two parameter sets for the above‑mentioned USDm pairs:

  • Spread fee: 0.00% → 0.05% (0bps → 5bps)
  • Circuit breaker threshold: 0.10% → 0.15% (10bps → 15bps)

The increased circuit breaker values are proposed because the current 10bps breakers have started to cause significant downtime (notably for the USD₮ pair) due to recent USD₮ price instability.

The increased spreads are proposed because the current 0% spreads expose the reserve to potential arbitrage losses while related swaps are not generating protocol revenue. It is expected that this leads to reduced swap volume on Mento but an overall increase in protocol revenue and better protection against arbitrage losses for the Mento Reserve.

The current BiPoolManager implementation does not allow updating a pool’s spread directly; it requires fully destroying and re‑creating the exchange. To simplify this proposal, a temporary BiPoolManager implementation has been deployed that exposes a setSpread(exchangeId, newSpread) setter. This temporary implementation is used only to update the spreads; the BiPoolManager is then reverted to its original implementation as part of this proposal. The temporary implementation has been deployed and verified at: 0xC016174B60519Bdc24433d4ed2cFf6c1efaC7881

Affected Pools

Pair Exchange ID Current Spread New Spread
USDm/USDC 0xacc988382b66ee5456086643dcfd9a5ca43dd8f428f6ef22503d8b8013bcffd7 0.00% 0.05%
USDm/axlUSDC 0x0d739efbfc30f303e8d1976c213b4040850d1af40f174f4169b846f6fd3d2f20 0.00% 0.05%
USDm/USD₮ 0x773bcec109cee923b5e04706044fd9d6a5121b1a6a4c059c36fdbe5b845d4e9b 0.00% 0.05%

Value Delta Breaker Thresholds

Rate Feed (Pair) Rate Feed ID Current New
USDC/USD 0xA1A8003936862E7a15092A91898D69fa8bCE290c 0.10% 0.15%
USDT/USD 0xE06C10C63377cD098b589c0b90314bFb55751558 0.10% 0.15%

Transaction Details

This proposal consists of 6 transactions.

Step 1: Switch to Temporary BiPoolManager Implementation

  • Call _setImplementation(address) on the BiPoolManager proxy to switch from the current implementation to a temporary BiPoolManager implementation that exposes setSpread.

Step 2: Update Spreads for USDm Pairs

For each exchange in the table above:

  • Call setSpread(bytes32 exchangeId, uint256 spread) to set the spread to 5bps

Step 3: Update Value Delta Breaker Thresholds

Circuit breakers are configured per rate feed. A single transaction updates both feeds:

  • Set USDC/USD rate feed threshold to 15bps (shared by USDm/USDC and USDm/axlUSDC exchanges)
  • Set USDT/USD rate feed threshold to 15bps (USDm/USD₮ exchange)

Step 4: Restore Original BiPoolManager Implementation

  • Call _setImplementation(address) on the BiPoolManager proxy to switch back to the original BiPoolManager implementation.

Relevant Addresses for Verification

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