Great points again @TylerEther
We similarly considered setting a higher Borrow Kink with a high Annual Borrow Interest Rate Slope High as a hybrid approach to the current and proposed IR curves. Longer term we plan on recommending this type of hybrid IR curve when the protocol has greater TVL.
The reason we decided to move forward with the more aggressive approach for now is because we view protocol growth and especially migration as highest priorities in the short term. As we mention here, despite two separate v2 → v3 COMP reward migrations, none of the top v2 non-recursive stablecoin borrowers have migrated over. There’s currently ~$72M borrowable USDC in v3, and the highest non-recursive v2 borrower borrows $74M. We want to incentivize the large borrowers from migrating over as much as possible, so flatlining at the kink removes any chance of dissuading borrowers due to variable borrow APR and high max borrow APR.
In the case that the utilization is maxed out at 100% and suppliers don’t quickly join the protocol, then we will certainly look into more quickly proposing the hybrid approach and/or allocating rewards to suppliers. However, for this to happen, it means the IR curve change would have incentivized borrows to increase from $185M to $257M (+39%) without increasing rewards, which would be a great sign. This also assumes no increase in supply, which seems unlikely given that supply APRs will be even more appealing at the current 72% utilization level, much less 100%.
If we look at the Polygon USDC comet, USDC suppliers flocked to the protocol very quickly after rewards were recently added to the supply side, indicating USDC suppliers are quick to join when incentivized.