RE: The Dao Street Journal: Bitshares and BitUSD

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ppitonak (51)in #bitshares • 7 years ago

this is dangerous, lowering minimum collateral ratio could/should be done when bitUSD grows and is healthy but definitely not as a solution for this "persistent margin call"
so I would create 1000 bitUSD and send them to a different account, do I "hold net short positions in bitUSD"?

7 years ago in #bitshares by ppitonak (51)

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john-robert (55) 7 years ago

Thank you for articulating a position that I am sure many in the community hold.

You can make the case that lowering the required ratio of overcollateralization would encourage global settlement. That is certainly the way it seems at first. But consider the counterpoint that people who want to go long bts and short bitUSD would have more potential for selling and eating away at the least collateralized positions. In effect this could strengthen the overall collateral pool for a given supply of bitUSD. Does that make sense? The problem with believing that 1.75 is somehow safer is that if the market cannot meet the bids for bitUSD (ultimately what the magin call does) then the effective ratio of the pool is not 1.75 but much lower. The ratio does not actually protect the asset if the largest net short positions sink deeper and deeper.
Any direct subsidy could come with restrictions like lock-up or something else the community agrees on. You could look at your point as a loophole or you could look at it as fair compensation for taking on the opportunity cost of staking bts and risk of losing your collateral in a margin call.