# GDOT: Remove vDOT Peg Illiquidity Discount & Tighten Peg Update Cap

## Summary

This proposal restores the GDOT stableswap pool's (pool 690) vDOT peg to the fair value of vDOT (the Bifrost vDOT/DOT conversion rate) by neutralizing the illiquidity discount currently applied to it, and simultaneously tightens the pool's maximum peg update rate from 6% per block to 0.000012% per block, in line with all other pegged pools on Hydration.

## Background

When GDOT launched, the vDOT peg was set equal to vDOT fair value. At the time, Polkadot's unstaking period was 28 days, and rather than wait out the unbonding queue, holders would swap vDOT for DOT in our pool — pushing it heavily out of balance. To account for this, an **illiquidity discount** of 0.9% (factor 0.991) was applied to the peg via a managed discount oracle.

Since then, Polkadot has reduced the unstaking period to just 2 days. The structural sell pressure has disappeared entirely — the pool imbalance is gone, and in fact the pool now skews heavily toward DOT *because* of the discount: the pool prices vDOT 0.9% below its fair value, making it unattractive to sell vDOT into the pool.

The discount has served its purpose and is now causing the opposite distortion. This proposal neutralizes it.

## What the proposal does

A single `utility.batchAll` with two calls, executed in this order:

1. **`stableswap.updatePoolMaxPegUpdate(690, 120 perbill)`** — lowers the maximum peg movement from 6% per block (an outlier set when the discount was introduced, so it could take effect immediately) to 0.000012% per block, consistent with every other pegged stableswap pool. This makes the peg correction below glide in gradually instead of repricing the pool in one step.

2. **`dispatcher.dispatchAsAaveManager(evm.call(...))`** — calls `setPrice(100000000)` on the vDOT discount oracle (`0xCfAB6a4031C70Da0F0cf6F31A252c16119DB3611`), setting the discount factor to exactly 1.0 (8 decimals). The peg oracle computes `discount × Bifrost fair rate`, so with a neutral discount the peg becomes exactly vDOT fair value.

The discount oracle is deliberately left in place (rather than removed from the oracle chain) so the coefficient can be adjusted again by governance if market conditions ever warrant it.

## Expected effect

- The vDOT peg target moves from `~0.991` × fair value to fair value (`~+0.9%`).
- With the tightened cap, the peg glides to the new target over roughly 5 days (~75,000 blocks). The stableswap dynamic fee mechanism raises the trade fee while the peg is moving, protecting LPs during the transition.
- Thereafter the peg tracks vDOT fair value continuously. The 120 perbill/block cap leaves `~18×` headroom over vDOT's natural appreciation rate (`~3–4%` APR), while protecting the pool against oracle glitches.

## Verification

The exact preimage was verified via chopsticks simulation against mainnet state (peg cap updated, discount oracle set to 1.0, all EVM calls executed successfully with no silent reverts) and executed end-to-end on a lark testnet fork, where the peg glide was observed matching the runtime math exactly (120 perbill per block) across multiple trades.

**Preimage hash:** `0x54193a8653bc1b75f45aa5cb1377dba88b54d9596afa39ad5769ed4e05046387`


#362 GDOT: Remove vDOT Peg Illiquidity Discount & Tighten Peg Update Cap