MSC Update-1 w/Roadmap

Start liqidatiing when it falls bellow 110%

And what if you have so much to liquidate at 110% CR that it moves the price by 20%?

how is that not a problem currently, if you put so much collateral so that after you get liqidated most of loans are under 100% LTV

I would assume that there are at least two factors here:

  1. You would have to buy “just” 400k$ of mTWTR to move the price by 12%, while moving it by 50% requires 3M$, which seems like a lot more.
  2. If the “real” oracle price is not so high - eg. TWTR increased just by 20%, but on TerraSwap liquidations have pushed the price by 50% - then I would assume that a lot of people would come in and short-sell mTWTR, dumping the price to levels where liquidation is still profitable for the liquidator. On the other hand if the oracle’s price is already above whatever price that makes liquidation feasible (as in case of +24% gap in TWTR last Monday at market open) then the chances of price dropping lower than that on TerraSwap seem pretty low.

BTW - what difference does that make for so many non-degens what MCR is? MCR plays a role only for farmers. If you want to use Mirror just to invest, then just buy m-asset on TerraSwap, MCR is irrelevant in that case. It obviously has some meaning when you want to short (so you borrow), but if you would short any real stock on a real exchange, what MCR they offer you, if your position still remains open AFTER market close? I would guess that not as low as 110%…

So you want an MCR substantially higher than 110%?

You don’t understand how liquidations work.

when LTV, or MCR gets under a certain value, positions get flagged for liquidations, then bots pay of loans, and receive collateral that user has put up. Then they can decide what to do with it, most sell it

Probably the most suicidal thing to do in the current situation would be lowering MCRs. We already have Spreads up to 25%, if you lower MCRs to 130% the Liquidators will have to pay nearly all of their potential gains for Premium. If then there is someone who makes the Premiums go even higher it is over, right?
How is the Liquidator supposed get any profit if MCR is at 130% and mAsset is Trading on a 35% Premium? Everyone would just withdraw all their Collat to a maximum because it is cheaper than buying back the borrowed mAssets

Wow +1 thanks for your rational thinking. I love how now everyone is “Oh no the liquidators who have made millions off of FCFS liquidations for the past year+“ lmao.

Everyone continues to sit here with there thumb up there behind speculating how to fix a problem but not acting.

MKO and mSPY have been at 110% for how long now??

This is why the MSC has been focused on improving the liquidation mechanisms before addressing the MCR’s, even though lowering the MCR’s is on this roadmap.

I also shifted from my work on liquidation mechanisms (SIMP 2, but 2.1 will be out soon) to focus on premiums (SIMP 3 was just published) because the community voice has been strong that premiums are the biggest concern right now.

The Mirror Steering Committee prefers “move slowly and get it right” over “move fast and break things”. That preference doesn’t always make it to the words that we say, though… I think we could all be a little more diplomatic.

It’s important to realized that MSC isn’t the next TFL, though. We’re a bunch of volunteers trying to think systematically about how to improve Mirror without breaking anything! The mandate we have is very soft, and we are trying to ensure we have community consensus at every step so that our limited budget isn’t wasted on development bounties that will never be approved by governance. That means very slow progress.

thankyou for the clear and thoughtful explanation