Summary

Reduce the debt ceilings while leaving all other parameters unchanged:

• MSETH: 250,000 → 50,000 HAI
• YV-VELO-MSETH-WETH: 500,000 → 100,000 HAI

Rationale

MSETH is underbacked, trades near 0.59 ETH, and has limited market depth. Metronome treasury buybacks are discretionary, not an on-chain price floor.

HAI’s direct MSETH collateral is especially exposed to abrupt repricing:

• Its oracle has a one-hour delay.
• A SAFE opened at the 135% safety ratio becomes liquidatable after a 3.7% price decline.
• Assuming the maximum 20% auction discount, principal bad debt begins after an approximately 7.4% decline.

The debt ceiling is therefore the only deterministic limit on losses when price movement outruns the oracle and liquidation process. A 50,000 HAI ceiling caps direct principal exposure at that amount. Current direct MSETH debt is approximately 9,922 HAI, so this change does not affect existing positions.

The LP collateral is safer because it includes WETH and uses 180%/175% safety and liquidation ratios. However, it remains correlated MSETH exposure. As MSETH falls, arbitrage exchanges the pool’s WETH for MSETH, increasingly concentrating the LP in the weaker asset. A 100,000 HAI ceiling recognizes its stronger structure while sharply reducing the current 500,000 HAI tail exposure.

Proposal actions

Execute two calls against the HAI SAFEEngine:

0x9Ff826860689483181C5FAc9628fd2F70275A700

1. Set MSETH ceiling to 50,000 HAI

• Value: 0
• Function: modifyParameters(bytes32,bytes32,bytes)
• _cType: 0x4d53455448000000000000000000000000000000000000000000000000000000
• _param: 0x646562744365696c696e67000000000000000000000000000000000000000000
• _data: abi.encode(uint256(50000000000000000000000000000000000000000000000000))
• Calldata: 0x12f335264d53455448000000000000000000000000000000000000000000000000000000646562744365696c696e6700000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000600000000000000000000000000000000000000000000000000000000000000020000000000000000000000022361d8afcc93343e962029a7edab2000000000000

2. Set YV-VELO-MSETH-WETH ceiling to 100,000 HAI

• Value: 0
• Function: modifyParameters(bytes32,bytes32,bytes)
• _cType: 0x59562d56454c4f2d4d534554482d574554480000000000000000000000000000
• _param: 0x646562744365696c696e67000000000000000000000000000000000000000000
• _data: abi.encode(uint256(100000000000000000000000000000000000000000000000000))
• Calldata: 0x12f3352659562d56454c4f2d4d534554482d574554480000000000000000000000000000646562744365696c696e67000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000006000000000000000000000000000000000000000000000000000000000000000200000000000000000000000446c3b15f9926687d2c40534fdb564000000000000