STBL -> STBL2 Next Steps

Hi Algofi Community. With the growth of the V2 Lending Protocol we have also seen STBL2 adoption grow and surpass that of STBL V1. STBL2 has a range of improvements over its predecessor that better position it for a central and lasting role in the Algofi and Algorand ecosystems. STBL2 has a long way to go and it’s incumbent upon the community to help drive its growth.

As such, the core Algofi team is considering a proposal to decommission STBL v1’s Stability Peg Index as part of the ongoing effort to eliminate sources of ongoing developer work that are no longer driving value to the protocol. The Stability Peg Index was one of a handful of tools employed to keep STBL v1 pegged, but as more liquidity migrates to STBL2 it has lost much of its utility. Additionally, in the opinion of the team, the key tool for maintaining the STBL peg (in the past and going forward) is the modulation in STBL’s interest rate.

In summary, decommissioning the Stability Peg Index will free up developer time while offering additional incentive for migration to the v2 Lending Protocol and STBL2 without materially impacting the peg mechanism for STBL v1 which is mostly driven by borrow rate modulation, (STBL Borrow Rate - Algofi).


does that include the STBL rewards for the STBL-USDC LP or do you want to only remove the ALGO rewards and keep the STBL rewards?

since the STBL for the rewards are generated as borrow interest from people borrowing STBL i think the STBL rewards should stay (at the 1/2 borrow APR rate for STBL which would be sustainable). the STBL in the treasury might otherwise become a problem for people who want to pay back their STBL loans in the future because they are essentially removed from the circulation


Good point about STBL being removed from circulation, that would need to be addressed in some way (1 for 1 USDC redemption would be a pretty simple option).

The primary goal here is to (eventually) fully decommission both STBL staking and STBL-USDC-LP staking, as each of those require ongoing dev work and are not adding much value to the protocol. Maybe the approach is more stepwise, i.e. first decommission pure STBL staking, which should drive some repay, then decommission the LP incentives more gradually, perhaps a prolonged period slightly under break even. In the meantime adding some 1-to-1 redemption mechanism to allow people to exit STBL at cost will prevent price inflation.

Regardless of what we decide, freeing up developer time and reducing overall protocol complexity is an important long term goal here.


Seems like this just takes away from STBL2 liquidity and will slow the growth of the overall project. 1 for 1 with USDC (mentioned by @pcolella) is a good idea. Maybe a reward booster for STBL holders to burn tokens and receive STBL2+BANK?