# MIP100: Stable Asset Allocation Framework

## Preamble

```
MIP#: 100
Title: Stable Asset Allocation Framework
Author(s): GFX Labs (@gfxlabs); Flipside Crypto (@rspa)
Contributors:
Tags: MIP, PSM, stablecoin
Status: Obsolete
Date Proposed: 2023-01-26
Date Ratified: 
Dependencies:
Replaces: None
Forum URL: https://forum.makerdao.com/t/mip100-stable-asset-allocation-framework/19556
Ratification Poll URL:
Extra: This MIP has been made obsolete by the passage of [MIP102c2-SP1](https://mips.makerdao.com/mips/details/MIP102c2SP1)
```

## Sentence Summary

This MIP establishes a framework to guide allocations amongst stable assets with similar ultimate underlying.

## Paragraph Summary

This framework attempts to systematize the treatment and allocation of stable assets within the Maker protocol. Such a framework should reduce the need for ad hoc evaluation of individual partnerships where the ultimate underlying asset is bank deposits, cash, government securities, money market funds, or other stable-value instruments designed to maintain a $1 face value.

## Component Summary

**MIP100c1: Definitions**

**MIP100c2: Favored Stable Asset Status**

**MIP100c3: Prohibitions On Stable Assets Without Favored Status**

## Motivation

MakerDAO and the DAI stablecoin are the epitome of decentralized stablecoins. Since developing the PSM (Peg Stability Module) it has protected DAI’s 1:1 dollar peg even in times of severe market turmoil. At the same time, centralized stablecoins and their derivatives make up 65% of all DAI collateral.

This capital has mostly been idle, which is about to change, thanks to stablecoin issuers sharing a portion of their yield with MakerDAO.

To make such partnerships stable, mutually beneficial, and long-lasting, MakerDAO establishes a list of requirements stable asset partners have to meet to become eligible for a coveted spot in the MakerDAO PSM.

1. Positive credit assessment by at least one trusted, professional third-party with adequate experience and credentials
2. Competitive marketing incentives that reflect current market conditions 
3. These incentives start to be paid out from 100M in the PS;
4. Incentives have to be paid out every month at the very least, more frequent payouts preferred
5. Funds remain in the PSM or can be put into a CES CU Safebox with no vetoing abilities for withdrawal

![Dai Supply](https://github.com/makerdao/mips/blob/master/MIP100/daisupply.png)

![Dai Price Chart](https://github.com/makerdao/mips/blob/master/MIP100/daipricechart.png)

## Specification / Proposal Details

### MIP100c1: Definitions

* Stable Asset: An asset that is designed or intended to hold a stable NAV or market price in US dollar terms.
* Favored Stable Asset: A stable asset that has satisfied the requirements in MIP100c2

### MIP100c2: Favored Stable Asset Status

To qualify as a Favored Stable Asset, the asset must meet all of the following criteria:

* Receive a positive credit assessment by at least one external, professional credit rating agency (or applicable alternative if credit is not involved)
* Competitive marketing incentives that reflect current market conditions. Marketing incentives might orient themselves along the lines of what Maker arrangers like Monetalis can offer.
* Where not automatic, incentive payout occurs on all of the assets above 100,000,000 DAI within the Maker Protocol
* Incentives have to be paid out every month at least, preferably on the block level
* Assets remain within a Peg Stability Module or in another location where Maker governance can exercise unencumbered control

### MIP100c3: Prohibitions On Stable Assets Without Favored Status

No stable asset without favored status may purposefully exceed 100,000,000 DAI within the Maker Protocol. This is subject to the following exclusions: 

* USDC
* GUSD
* Stable assets currently within the Maker Protocol that maintain greater than or equal to 100,000,000 DAI in total value
* Stable assets with crypto-native variable rates (e.g., stable-stable LPs, aDAI)