So you let us repay but not withdraw? I’d rather not risk more capital.
How about let us self-liquidate?
Okay, yeah I think that is fair. Thank you for your comment.
After talking to a bunch of people about this, deducting your loans from your deposits should be possible.
It will be added to the proposal.
Well no, because you lose your leverage. And leverage has unquantifiable monetary value. A lot of people want to keep their loans and want to continue paying the interest. So liquidating everyone is a bad idea.
- Self liquidation is enabled now
deducting loans should be a consideration since the initial LTV on deposits in your plan is 0-10% only. capital will just sit there idle for 12-24m or large haircut… not too sexy
It’s already in the proposal.
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interest isnt revenue when the user will never pay the debt pack. eventually you need to liquidate 50k of the 100k wbtc and write off the borrow.
interest could have users debt go as high as you want and until thats paid back its not revenue and nothing comes into the protocol
Interest IS revenue even if the user doesn’t pay back the debt.
The interest is deducted from his net deposits. If enough time passes, the entire deposit is liquidated, but it might take 5-10 years for that given user. Although, with 70-80% LTV loans (so most loans), users would be liquidated in 2-3 years. Therefore, less deposits are needed to be paid back. This is possible because all loans are overcollaterized.
You are right in saying that in this case (if the user doesn’t deposit funds or pay back the loan), no additional money comes into the contract, however, less deposits will need to be paid back as well.
So the two are exactly the same. Whether he pays into the contract, or the contract has to pay less out, is exactly the same.
Great thanks.
Of course it shouldn’t let people self-liquidate new borrows, but only borrows before the exploit.
This is a great proposal, +1 from me. One question I had is with the following:
- Withdrawals will be disabled for the first 12-24 months
Is this still the case if there is a soft or hard bailout? If by some graces we get a bailout and the protocol is fully recapitalized in that time, and any soft bailout agreements allow it of course, could those withdrawals be enabled sooner? This bull market won’t last forever and we should allow those who want to sell their assets to do so.
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This math seems a bit wrong to me. Again there is no way we will get to a plan that guarantees 100% paybacks. But this is assuming a lot of things:
- Bull market lasts 2 years
- RDNT price outpaces the assets that were stolen (if ETH goes up 2x, RDNT has to go up 8x for example)
We may have to alter the levers as time goes on. For example if it is clear that token inflation will never pay us back, we will have to use more opex. Or just accept that we only pay back 60% of funds and let the rest go. This plan as it stands is leaving a lot to market gods.
Sure but if we’re charging interest on the borrow and think thats a good idea because it will eventually liquidate the collateral, and create revenue
if you initially just give out less rtokens based on net balance you capture that revenue or upside immediately
Thanks for your reply,
I still have a few questions:
- For the revenue of locked DLP, does it also include the revenue of ‘Pre-Hack Isolated Markets’ (borrowing interest, flash loans, and liquidations that are claimable fees)?
According to the mechanism of the proposal, the locked DLP should have revenue from the RIZ market, the main contract market and ‘Pre-Hack Isolated Markets’, right? - Regarding “Allocation of future protocol revenue”, will the revenue of all chains be distributed?
And the redistribution is to take another 0-20% from the original Opex15%, lenders 25%, and DLP 60%?
In your opinion, which object will this allocation be taken from?
That is not correct.
In your model, you don’t capture any future revenue. You liquidated all loans. So the interest won’t be ticking in the future.
Exactly!
You will only be able to self-liquidate in the first month, while LTV is 0% for new loans. And only then will LTV for new loans start to increase.
Yes! Obviously, if we get a 100% bailout there isn’t even any need for any proposal. You can just make a simple claim contract or relaunch the normal loan markets.
If we get a 10-90% bailout then my plan handles that well. The funds are deposited into the contract and we raise the LTV to the level.
The biggest the bailout the better.
There are multiple revenue sources in the proposal. The math regarding inflation is just napkin math. Even if it pays back less it’s fine.
A huge chunk of the deposit portfolio is stablecoins. So the $ amount doesn’t increase as drastically as you imagine.
Obviously, the plan is optimistic about Radiant, a potential bailout and the markets. There is no other way to write a proposal.
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- DLP won’t receive revenue from the ‘Pre-Hack Isolated Markets’. All fees generated by the ‘Pre-Hack Isolated Markets’ will recapitalize the contract itself. Besides, there will be no flash loans or liquidation fees anyway. The locked DLP will have full revenue from RIZ markets and the main core markets as before. So nothing changes for DLP holders. But this also depends on what the developers can and cannot do easily.
- That is an excellent question. I would assume you don’t want to take away from lenders. So Opex and DLP holders both should pay some. But when we come up with the number it will be added to the proposal!
Let me know your opinion about this, please!
The interest isn’t actually revenue though. Nobody is paying that interest with new money. You are missing my point.
All this interest is going to do is make the LTV ratio of the loan become unhealthier and slowly push the loan closer and closer to liquidation. The only time the protocol benefits from interest accruing is 1) when someway pays back the loan plus interest (which they wont do) 2) when the debt is liquidated and outstanding debt goes down
So if we want to capture upside from 2) just wipe the debt from the get go and write off borrows to zero.
I don’t know how else to explain it.
If you liquidate everything now then a user who had 100k deposit and 80k borrowed will have a 20k claim.
But if you keep the loans the interest keeps ticking and in 1-2 years that person will be liquidated and the contract has to pay 0 to that person. (Assuming that user does nothing.)
Most people I spoke with want to keep their loans(their leverage) and would be happy to pay the interest into the contract.
What I’m proposing and what you are proposing are different. YOU aren’t capturing this upside at all.
In the Celsius and Blockfi bankruptcy companies were lining up to bid on the loan portfolio alone. Why do you think that is?
So they were willing to pay to get the loans.
And you would just delete that.