Optim Bond Token 1 Month support only

Liqwid DAO community voted unanimously to support Optim 1 month and 3 month Bond Tokens in proposal 21: Liqwid App. The updated risk parameters voted in for each asset are

The Liqwid Core Team is proposing to fully support the Optim 1 Month Bond Tokens as collateral with the above parameters while not supporting the 3 month. The reasoning is two-fold: 1. liquidators should not be asked to accept long duration risk on Bond Tokens before being able to redeem them and 2. credit expansion needs to balance the ADA lenders preferred repayment schedule. Some context on each of the two problems that are solved by only supporting 1 month Bond Tokens:

  1. Liquidators are the lifeblood of liquidity pool money markets as they protect the protocol from unhealthy positions. As such we should not ask liquidators to essentially lock up their ADA liquidity in a Bond Token for an extended period of time.

  2. ADA lenders have a preference towards shorter repayment periods to balance the loan book against long term loans given Liqwid’s perpetual loan model. Supporting 1 month Bond Tokens only means ADA lenders are repaid interest at a minimum of once per month. Supporting 3 month BT’s would mean at a minimum ADA lenders would only be paid interest once every 3 months.

Proposed resolution
A solution would be to support a 2 week (3 epoch) Bond Token in addition to the 1 month (6 epoch) Bond Token. This would support both points above by increasing the frequency of the ADA lenders interest repayment schedule and shortening the time liquidators must forgo their ADA liquidity before being able to redeem Bond Tokens. The proposed 2 week BT risk parameters would be a Liquidation LTV of 96%, 4% liquidation penalty paid by borrower.

Do you support this proposal to only launch support for 1 Month Optim Bond Tokens?

  • Yes
  • No

0 voters