A point brought up earlier in this forum mentioned using MakerDAO as an example of good parameters… MakerDAO is one of the longest standing borrow platforms and truly has been stress tested to the max. The only reason they have survived is because of their strong safety measures in a HIGH liquidity environment, 170% MCR for some vaults… Indigo’s current parameters show support for risky borrow levels in a LOW liquidity environment (with respect to on-chain ADA liquidity). In my opinion, this is very irresposbile, we need to increase the safety. We need to avoid bad debt at all costs.
Yes, I like this, an argument in favor of increasing the MCR is the potential for greater stability and resilience in the face of market fluctuations. By requiring more collateral to back iUSD, we can provide a buffer against sudden changes in market conditions which greatly reduces the risk of going insolvent.
Yes there is reasonable arguments for increase limitations.
whether via MCR or any other measures.
Indigo draw from design of Liquity and MakerDao. both of which has more robust limitations to protect.
we can’t just depend on 110% MCR as a single source of protection.
Djed require 400% collateralization, it would be naive to think that just by having 110% + stability pool will solve the solvency of a decentralise stable coin.
There is a global TCR for liquity and recovery mode for Liquity as well but I find it overbearing that it will be able to liquidate anyone at 150%
in my opinion prevention is much better than cure so setting up the right risk parameter to ensure long term growth rather than short term capital efficiency is much more important
But sir, this is assuming 100% of the liquidation goes to the stability pool… why don’t you just fix 10% of a liquidation going to the stability pool, while the rest goes back to the vault opener? This is the best way to do
I like the idea of protecting the protocol. My only concern is I think this will also delay arbitrage for iusd pricing on dexes and introduce premium expansion.
We have to be mindul that the utilization of iusd will be reduced if people have to pay a 15% premium to use it. Even at 110% we are constantly seeing 2-8% premiums. Increasing to 120% will likely increase these premiums unless a better arbitrage solution is unveiled
WIll you hold an AMA to inform the community and field questions. This situation needs a bit of media so it doesnt look like the protocol pulled a fast one so to speak. The normal avenues of social exposure have been utilized …but theres a spirit of FUD floating around and everyone is sniffing around for the Scammy looking behavior…like the just pulled on MELD but it was an investor apparently. Just a concern … TY #HAILPERNIS