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. credit expansion needs to balance the ADA lenders preferred repayment schedule and 2. liquidators should not be asked to accept long duration risk on Bond Tokens before being able to redeem them. Some context on each of the two problems that are solved by only supporting 1 month Bond Tokens:
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.
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.
Proposed resolution would be to increase the maxLTV of the 1 month (6 epoch) BT to 99% (99.1% LiquidationLTV). This would enable Bond Token holders to complete the most capital efficient yield strategies available on Cardano. After a few weeks since launch 85% of outstanding ADA loans are backed by Optim BTs.
*If this proposal succeeds the update of maxLTV to 99% would go into effect after the first complete 6 Epoch cycle ends.
Do you agree with this proposal to support Optim 6-Epoch Bond Tokens exclusively with the updated parameters?