Changing the collateral factors for the eRSDL token

Proposals
#21

I think we have to be very careful here. I don’t disagree the new rates sets a better safer platform going forward but it seems like a reset.

I’ve gone over and over the numbers and all scenarios and I just cant shake a few things.

The orange zone you mention has an additional 6m tokens (x2 orange zones) taking the at risk to 38.6m tokens. You run the risk of losing just under half your platform users/investors here. (dependant on larger investors)

I see it as unless you have lower than approx. 16% borrow im pretty certain you get liquidated in all scenarios from now if you use $eRSDL as collateral. That is taking into consideration where I see the liquidations dropping the price because they 100% will. The genie is out the bottle now and people will be waiting to liqudate as much as possible and sell as much as they can like crazed animals. There is a huge amount of greed that people will take advantage of here which in turn will drop the price aggressivly.

I’m pretty sure you have gone through your numbers with the team very well also.

Ive looked into variables such as uni/kucoin available buyers + available funds…additionally how easy it is to move the price on kucoin. (note uni outweights kucoin 10:1) There is only 800k worth of $eRSDL token buyers currently down to a price lower than $0.005. (Basically if your model is not right…this could be trouble for a large amount of platform users).

I havent ignored that there will be people wanting to buy at lower prices and bots doing there thing in my calculations so im sure the token price will not go that low.

Where do I see the price going in the short term? I wouldn’t rule out $0.03 The reason I mention this is because we need to keep as many holders as you can but the liquidations this may cause through further token price drop may be under calculated.

This is by no means a dig and additionally I am definitely not trying to tell you how to do your job I just putting overs some opposing views that may help a few platform users & keep them invested. I’m aware this is going to be a rough ride in the short term.

I just worry there is a sour taste from a lot of people who got sucked in to the SSS not understanding the messages that were put out about the apy’s and now people enjoying the platform as it was presented now and being forced into liquidation. It may look to some people like 2/2 a thumbs down for product releases.

  • Is it a given that you will lower collateral to 40% no matter what?
  • What is the plan going forward if worst comes to worst and you loose half your holders?
  • Do you have a contingency plan for releasing news to counteract the short term drop from liquidations? <- Important
  • I don't no if this is even allowed by you and the team yet but to put out more news of potential clients you are in talks with or just some subtle messages to keep some positivity.
  • Do you have anything that can make it look like your looking after investors?

I’m really sorry about this long message and I could just waffle on for ages but I keep coming back to the 5 keys you mentioned.

Safety - With the CF change was the platform safely presented?
Courtesy - For the people who have supported and grown with the project and used the platform as advertised originally to make there calculated risk decision…40% CF is forcing liquidations

There is positives with the safety and courtesy that you have done obviously. Just some opposite views

7 Likes
#22

I agree with leslos here. This is all coming at a particularly fragile time in the market so it’s going to be punishing on those who have utilized the lending protocol the most, which the team has heavily marketed us to utilize! I will certainly be paying off the majority of my loan to mitigate any liquidations but this is just another massive speed-bump that is quite tiresome to navigate.

I’ve been here since well before the SSS crash/debacle and fought off FUD on Twitter for many months for the project. I wholeheartedly believe the team can and will reverse course and are doing their best, but I do feel these changes will unfairly punish the folks who are supporting the project the most. At first the SSS launch seemed so promising, but once I locked my tokens in the protocol for $200 gas fees every transaction it became painful. Before I knew it the price plummeted and I was essentially stuck, uninterested in paying $300 - $500 to exit the protocol. Borrowing was not advertised as being so costly, gas fees should have been more transparent as being akin to AAVE’s prices to interact with the protocol. Retrieving rewards was insanely pricey at first unless you were awake at 3am on a Sunday. Now more changes coming that could easily liquidate millions of tokens on somewhat short notice? I can see why many have skittish sentiment towards the project.

I know there’s no easy solution here, so I don’t mean to just simply complain. I just wanted to echo what leslos said and share some frustrations as I do watch every Town Hall, read about the project daily, and believe in its utility. Just sucks being the loyal retail customer that feels like bitumen in the roadway.

6 Likes
#23

You, Leslos and others have been loyal to the project for a long time, and the perspectives you raise are important. We will incorporate into our own internal discussions to make sure as many positions as possible are factored into the conclusion.

8 Likes
#24

Thanks Howard. I understand and appreciate how complex this collateral ratio change decision is and will be for the project. I appreciate the team doing their best to conceive of a way to respect longstanding holders while also looking at the success rate of the project as a whole.

3 Likes
#25

We live by those five core principles. If at the end of the day we are trying to position the platform to have the best risk v yield structure on the market, be attractive to CeFIs looking to do business with us through broader arrangements and use RL as a basis for the RF vaults, then there’s nothing to be gained from cutting our nose to spite our face. All adjustments will be made in a controlled manner, and communicated well in advance of actually being implemented. Folks need to time to enact their personal strategies.

2 Likes
#26

Thanks for taking the time to reply. I understand the goal and see the potential of the project is huge if you get it right.

We’re all backing the team for success. Keep hitting the milestones on the road map, and as long as plenty of communication is give around the timeframes and models of CF changes I’m sure the vast majority will be happy . (which im sure you would do anyway)

If your models and experience show and believe this is the recipe for success with CeFi’s wanting to do business I’m sure everyone will trust you and not argue on that front…Because this was always the goal!

Heres to a great Q4/Q1 :beers:

:ship: :+1: :whale2:

5 Likes
#27

Very well handled gents! :clap:

#28

I have copied pasted something i posted in discord already (and removed my frustration as good as i could). I agree with what leslos and tankos amongst some have mentioned already.

Setting aside that i understand what unfed is trying to achieve here. Numbers crunching and getting these proposals out is one but i have to react to this too bc the problem with numbers crunching is that there only numbers and there is a very clinical approach. So first users were all okay, most of them still are. Then ERSDL went down in price. Then The APY were set to ridiculous levels. And i know a few including myself who got stuck. I don’t want that apy’s either but i accepted them without repaying bc it would be more lucrative to hodl the other tokens i have instead of selling them to pay off. And now the collateral factor changes at a ridiculous speed. So that is like three strikes (not all bc of unfed ofc but it is how it feels kinda). The clinical approach like i have seen howard do in the forum discussion about ppl’s fund and ow hee, those liquidations are not an issue if we adjust the collateral %. Those ppl were fine, playing by the rules there were and now at lightspeed you want changes. Maybe some don’t care about liquidation but i know a lot that are even if the amounts are not too big. I saw Howard mentioning: well ppl were not persuaded to repay bc of the high apy’s. You got that right. They got stuck bc of ersdl’s approach and the selloff happening and had only one choice and that is to accept the apy or get liquidated. So it is not that clinical like you guys make it. IMO you could set the collateral factor for any new loans with ersdl as collateral as from today at 40% and have an exception for the ones that supported and bought ersdl in the first place, that would be an easy thing, with a slower transition to that 40% than what is proposed. I do get you want to get it over but i fear a massive impact on price and imo that is not what you would want to have.

i do get what you are trying to do, but it is kinda a non issue if attract new capital doesn’t get in. Lowering it to 40% wont change a thing about that, the biggest issue is not the ersdl collateral factor, the biggest issue is that the liquidity is way too low, the progress is behind and that new capital doesn’t go to unfed. And that is what you guys really need. The TVL just keeps dropping in general which doesn’t look good in the market. Now with these changes it would drop even further.

The proposal is done and votes are in. But one question, is there a need to implement it right now because there are many other developments that are more important than this change. Why not set a date with a progressive adjustment like in the proposal when the platform is fully live?

#29

I think you will be satisfied, the team agreed and announced to not affect previous suppliers/borrowers. Read more here:

3 Likes
#30

@nebreg I’m hopeful you were satisfied with the outcome, but wanted to address one point you asked at the end there. Is the change necessary, “… because there are many other developments that are more important that this change…”? And, the point on liquidity.

With gas fees being what they are the users of ReserveLending are going to be folks interested in larger block transactions and quasi-institutions in the space that just use our APIs (as opposed to the GUI). For the large stable providers, they are going to look at the other tokens’ supply-slide collateral rules when assessing safety. So development/deployment of additional product features and products, themselves, do peg in behind these changes.

The good news is that we are on the roadmap to unlocking the potential of the platform. With the splash page out and our conference schedule, we can market in person and online. With our rates where they are, and the otherwise great condition of the site and the community, it’s just a matter of time and getting eyeballs to move everything forward. Hope this helps.

-howard

2 Likes
#31

What was the result of this? I’m supplying all my ersdl as collateral which now has a pause on it. I’m at 30% of my borrow limit. Is something gonna shift soon and I may get liquidated?

#32

I gotta say it’s bizarre and confusing for the team to pause supplying of more eRSDL tokens without a formal post about doing so. We learned that you guys would create a new pool so previous suppliers wouldn’t be negatively affected by the changing rates (which was a great decision) but there wasn’t clear communication that you now cannot provide more eRSDL anymore until that new pool is created. Creates ambiguity for community like in the above situation with jbla.

From my understanding jbla your collateral factors will not change for you because the new collateral factors will apply to new suppliers only. You can still be liquidated due to the token price volatility, but not because of a change coming from the team.

1 Like
#33

How to prevent liquidation? #

There are 2 basic ways to prevent liquidation: add more of the supplied collateral OR pay back part of the debt.

This need changing on your FAQ’s as …well you know

1 Like