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General Discussion / Re: Proposed modification of the whole margin system for Smart Assets
« on: May 29, 2021, 06:47:22 pm »I posted this in BitShares DAC telegram group about liquidity pools, and I will post it here again:QuoteAlso, liqudity pools are set up by individuals, not the blockchain. Why would someone want to set up a pool for profit, then have that profit taken from them to keep people who chose to use margin afloat?Also, profit should not be spread to the debtors, they did nothing to earn the profit from a debt arbitrage done by a smart contract. If a smart contract is to be implemented to deal with bad debt, those holding debt are not entitled to that, but the blockchain due to the smart contract.
Hey Brendan! Good to hear from you!
Point (4) of the proposal doesn't imply that fees collected by the pool are to be given to the debtors. Far from it, It suggest that a bot buys the smart asset from any of the available pools (thus generates profit for that pool holders) and sells it to the margin wall generated whenever a debt position with CR < MSSR appears. This single operation helps to reduce the probability of GS.
Now, during that very specific single operation, a small profit may be obtained, that profit may be given to the debt holders. Point (4) also makes clear that such bots may already be running by individuals so, the whole point is optional and may be unnecessary.
My line of reasoning along the whole proposal is that debtors are incurring in a risk that, weather they notice or not, is higher than the probable reward obtained under the current protocol. So, there is need to further incentivize debtors to keep appearing, even during harsh bear markets, and so reduce the probability of GS.