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General Discussion / Re: Market making contest, stage three (updated)
« on: January 07, 2020, 02:41:23 am »
thanks for update
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The debt holders concern about global settlement and BitAsset Holders concern about under collateralized, there is solution available for both parties but need some changes on BSIP18 - Revive BitAsset through buying Settlement Pool.
Propose Solution:
1. Rather than force close all margin positions and move to settlement pool, the new solution is force close MCR <1 Margin Positions only and move to settlement pool, this will solve debt holders concern about global settlement.
2. Same as BSIP18, everyone can Use BTS to bid for those debts in settlement pool but we need to give them incentive to do so because investors will prefer to create new margin position rather than use MCR 1.6 to revive those debt.
3. Asset Owner set a new parameter call Minimum ReCollateral Ratio (MRR) eg. MRR 1.1
4. With MRR 1.1, investors can use 0.1 BTS to obtain 1 BTS Debt, this is a huge incentive for investors to keep BitAsset fully collateralized, this will solve BitAsset Holders concern about under collateralized.
I've been thinking of something vaguely similar, but I think there are some significant issues.
Here is one concern with this proposal: (I'll use BitUSD as an example.) What if BTS continues to fall after one of these force-settle events happens? Then you'll effectively have two "different" BitUSDs -- the stuff that's fully-collateralized, and the stuff that is collateralized only by the little bit of BTS in its own settlement pool. Even with your low MRR, BTS doesn't have to drop all that much for it to be very expensive for someone to bail out the settlement pool, so it could conceivably sit there for a very long time.
In a really nasty market, there could easily be millions of BitUSD sitting undercollateralized in settlement pools. If things get bad enough, you could have so much BitUSD in the settlement pools that BitUSD is, overall, undercollateralized -- even though the usual mechanism is still operational.
This question is one of the core ones I'll be dealing with if my research worker is approved.