Add stabilityFee parameter for Protocol Stability

[vishalchangrani]

Related issue

• Insurance fund implementation #84

Related PR

• [Draft] Add stabilityFee parameter for Protocol Stability #105

Context

Introduce a new stabilityFeeRate parameter that is applied in updateInterestRates by reducing debitIncome.

The combination of insuranceRate + stabilityFeeRate would be deducted from the amount paid out to lenders.

Funds collected via stabilityFeeRate can be withdrawn from the protocol by the owner and used to ensure the stability of MOET. This is a more permissioned feature than insuranceRate, which is intended to remain within the protocol and not be extracted.

This task includes integrating stabilityFeeRate into interest rate calculations and ensuring the collected funds are properly tracked and withdrawable.

Proposed solution

Stability Fee Implementation

1. Add fields to TokenState + initialize defaults in init().

access(all) var stabilityFeeRate: UFix64
access(all) var lastStabilityFeeCollection: UFix64

2. Add setters for stabilityFeeRate and lastStabilityFeeCollection with access(EImplementation).
3. Add Add stabilityFunds map to Pool resource + initialize.

access(self) var stabilityFunds: @{Type: {FungibleToken.Vault}}

4. Update updateInterestRates() function to include stability fee.

• FixedRateInterestCurve:
  creditRate = debitRate - insuranceRate - stabilityFee

• KinkInterestCurve:

stabilityAmount = totalCreditBalance * stabilityFee
creditRate = (debitIncome - insuranceAmount - stabilityAmount) / totalCreditBalance

5. Add collectStabilityFee() function.
   Similar to collectInsurance() but simpler - no swap, just withdraw from reservesand return vault.
   (collectInsurance() impl here)

6. Update the logic and renameupdateInterestRatesAndCollectInsurance() to updateInterestRatesAndCollectFees().
   (updateInterestRatesAndCollectInsurance() impl here)

7. Update Pool resource with additional functions.

access(EGovernance) fun setStabilityFeeRate(tokenType: Type, stabilityFeeRate: UFix64)
access(EGovernance) fun withdrawStabilityFund(tokenType: Type, amount: UFix64, recipient: &{FungibleToken.Receiver})
access(all) view fun stabilityFundBalance(tokenType: Type): UFix64

Questions to discuss

1. What should be the default value for stabilityFeeRate?
2. Should events be added for stabilityFeeRate and lastStabilityFeeCollection updates?
3. What access control should the stability fund withdrawal function have - EGovernance or another entitlement?
4. Who manages the logic that determines when stability fund withdrawals occur?

[Gornutz]

1. What should be the default value for stabilityFeeRate?

We can have a default value for the time being of 5% of the overall Interest rate collected. With the assumption of the stabilityFeeRate and InsuranceFeeRate being equal at the start and being able to be updated.

2. Should events be added for stabilityFeeRate and lastStabilityFeeCollection updates?

Would be a nice to have of those events added

3. What access control should the stability fund withdrawal function have - EGovernance or another entitlement?

As far as access controls go another individual would be better to answer that portion than myself. Possibly @Kay-Zee ?

4. Who manages the logic that determines when stability fund withdrawals occur?

This would be the foundation or governance that determines the logic at the start this will be 100% offchain and at the discretion of the foundation. Since the use of these stability funds are to improve dex liquidity for MOET, specific yield strategies, general protocol stability, etc.

On the implementation plan I don't see any issues with the proposed changes.

[vishalchangrani]

• KROK working on implementation.
• Have the draft PR ready.
• Ready for review the contract part, test are being worked on.