Simple Summary

The SCCP proposes to implement what was executed in SCCP-2095 with respect to legacy loans on optimism. This is done by raising the interest rate to the level that loans are open for liquidation, performing the necessary liquidation by repaying the sETH/sUSD borrowed. Excess ETH received back for performing the liquidation is sent to the Treasury Council safe on optimism.

Abstract

Legacy synth loans backed by ETH are still yet to be fully closed, despite funding rates being set to 30%, due to the fact of having a high collateralization ratio. This SCCP force closes these loans, with the needed synth liquidity to perform the action provided by Treasury.

Motivation

The liquidation of loans should result in a decrease synth supply by around 900 ETH and help relieve some of that peg pressure, Treasury can then at their discretion buy back synths in order to help lean on the peg imbalance on the ethereum network. It is worth mentioning that excess ETH as a result of the loans can be claimed by owners at a later date, by requesting it directly from Treasury.

Copyright

Copyright and related rights waived via CC0.