The pictures in this post are from one of our homegrown analytics tools we built to measure the impact of the collateral factor changes. This is my first forum post with pictures in it, so hopefully it renders properly. The information in this post should be considered draft, and since all the information is on chain, we would encourage folks to do their own analysis when making the decision to engage with the platform. We cannot guarantee any outcome and their are significant risks to users which should be considered.
This table is a summary of where we feel the CFs will end up. We are are not targeting an ultimate CF, and would like to see proposals in the Forum around this and other attribute changes going forward.
Here are historical daily volume (eRSDL count) figures with a variety of statistics (e.g. ave, max, and min) displayed. If we are being conservative 3.75mn to 5mn tokens trade daily.
If we look at what happens when the CF is lowered from 0.8 to .6, about 950k of eRSDL is impacted. Our conclusion is that market volume will absorb this activity. We considered that 1) these transactions will not occur simultaneously and 2) the bots may not pick up all the loans if it doesn’t think the economics make sense.
At first glance, the impacted eRSDL count of 27.9mn with an additional 4.7mn in the orange zone would appear too much for the daily volume to handle. Consider, however, that we are observing here the total count at a 40% CF. The step-down scenarios have been crafted in a way that attempts to keep liquidations well below daily market volume (count) observations.
There are risks. A steeper drop in the token price pushes more folks into liquidation. One benefit we observed was that while, in the short term, there will be selling of the tokens tied to liquidations, the post change platform is safer than the pre-change one. As I’ve spoken about in the past, lowering risk increases value and provides interesting opportunities.
We will be monitoring for those changes, and reactions can be made accordingly. From a leadership perspective, one cannot stress how much better aligned return v risk the platform will be after the changes are implemented. We do recognize that these changes will have a negative impact on some users, and we are listening to those issues as raised.