Ryan Sears [email protected]
The Kolibri peg has been off for the past couple weeks to the point where intervention seems to have become necessary to get the peg back on-track.
The underlying price of $XTZ has been slowly dipping/trading flat, so that (along with the price of $XTZ doubling in the past few months, creating more un-used collateralization usage) is likely the catalyst for larger ovens to exert sell pressure on kUSD to presumably go long on the underlying $XTZ, which has been pushing the price down to ~$0.90.
Kolibri’s first purpose is to remain a stable store of value. With low liquidity across the entire Tezos DeFi ecosystem, this is a hard thing to maintain given that even modest sized transactions have a significant price impact on $kUSD, so when larger trades are happening for extended periods of time, it can blow the peg out of balance.
As you can see, the peg remained within ideal ranges (the green area is +/- 5%) while the underlying price of $XTZ was climbing, but as it’s been tapering off/slowly dwindling, an uncoupling of prices between Harbinger and Quipuswap kUSD/XTZ has been happening.
In order to help relieve some of the buy-side pressure that’s happening, this proposal suggests a stability fee increase of 2%, from the current 19.5% to 21.5%.