Chance for speculator to exploit debt position owners is implicit arbitrage and will be healthy for the market. How can it be exploited? The Force Settlement Offset is 5%, which should make it hard enough. Please elaborate
Force settlement is a feature that must remain available IMO, it is a worst-case scenario measure. It will certainly never be used in a liquid market, the UI prominently shows the user if the market is the better choice.
But if there is any incident that the market crashes, the force settlement option must be available and I would not want to wait for anyone to activate it then.
I own a debt position with CR=3, now you force me to sell the collateral to you with a under market price, this is not exploiting, are you joking?
I simply haven't understood yet how the exploitation works.
Just to clarify for me, example from your picture:
latest price (LP) = 0.675035
settlement price (SP) = 0.670566
force settlement offset multiplier (FSOM) = 0.95
Now assume I hold 100 bitCNY
- I can sell on free market and get 100 * 1 / LP=148.14 BTS
- I can force settle, now assume it would happen instantly then I get 100 * 1 / SP=149.12*FSOM=141.67 BTS
As the holder of the bitCNY this only gives me profit if
LP * FSOM > SP. But, as long as
LP > SP, the holder of the margin position would have a loss compared to latest price, i.e. someone could pay to hurt you (unlikely to happen though). This does not take the force settle delay into account.
I think I understand the situation now, and I would agree this should be adressed. But not by disabling force settlement, but by ensuring that
LP * FSOM <= SP is maintained.
Just in general: The flag "DISABLE FORCE SETTLING" should be able to do exactly that, maybe a core dev could confirm. Not that I advertise this solution.