Current situation :
Currently coupons expire after 90 epochs(30 days), this penalty encourages coupon purchasers to delay purchasing coupons till the last possible epoch before debt is wiped out and a return to 1. This encourages behaviour which is suboptimal including;
A large quantity of coupons are purchased in the final epoch when it is
highly likely that the protocol will return to 1.
Coupons are highly risky therefore the premium is priced quite high, currently the highest premium is over 50%. Leading to large expansions during contraction.
If coupons do expire, there will be a reduction in ESD holders. Holder growth is a metric we want to grow and not reduce.
Proposal Summary :
Split the coupon into two parts;
The deposit is the amount of ESD that you lock for the duration of the time under TWAP 1.
The yield is the amount of ESD that you will redeem when TWAP goes above 1.
The only part that can expire is the yield, after 90 epochs. When that happens, the deposit is returned to the holder.
Details for discussion :
Debt Ratio/Debt Premium - Now that the deposit is no longer under threat, it seems the risk profile significantly decreases on the coupons. I suggest reducing debt ratio down to 10%, with a max 20% premium.
For existing coupon holders, we would split it into a deposit and yield based on the max premium.