Author Topic: Margin call algorithm is too dangerous for shorters  (Read 2971 times)

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Offline paliboy

You are right, the collateral will decrease.

@abit thanks for BSIP link

Offline Victor118



The algorithm buys back the asset but the collateral stays the same which leads to ever-increasing collateral ratio, even far beyond maintenance collateral ratio (MCR) which is not behavior that I would expect.


I don't understand , how the collateral can stay the same ?
When someone is margin called the algorithm buys back the asset by selling the collateral, so there is less collateral , no ?
« Last Edit: February 06, 2018, 06:28:39 pm by Victor118 »

Offline abit

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Offline paliboy

It's happening again, this time to rit-capital-partners


Offline Chronos

Wow, I was not aware of this. It certainly doesn't match what would be expected. I agree on the proposed fix.

Offline pc

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Offline oldman

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Offline paliboy

Would such a change require a BSIP and/or a hard fork?

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Offline paliboy

Hi, multiple positions were margin-called today and couple of people in Telegram pointed out that when you get margin called, it will try to settle whole postion, not only part that is undercollaterized.

For example this is Stan's HERO position after some part was already bought back:





The algorithm buys back the asset but the collateral stays the same which leads to ever-increasing collateral ratio, even far beyond maintenance collateral ratio (MCR) which is not behavior that I would expect.

My suggestion would be to change margin call algorithm so that it stop when collateral ratio becomes higher that MCR. In the example above it would mean that the algorithm would stop buying HEROs as soon as the collateral ratio of position would be higher as 200% (MCR of HERO asset).

What do you think, does it make sense? IMHO it would help big holders of smart assets and still keep the system stable.