Gauntlet makes the following recommendations to optimize risk and capital efficiency for Acala and Karura:
Since our last recommendations, VaR has decreased from $1.02M to $63k. All of the VaR comes from two assets: LDOT and LCDOT. LDOT's VaR has increased from $0 to $4k. LCDOT’s VaR has decreased from $479k to $60k. LKSM’s VaR has decreased from $541k to $0. The other assets (KSM, KAR, DOT, ACA) all have VaR remaining at $0.ACA, DOT, KAR, and LKSM are all relatively safe from a market risk perspective, so can have their liquidation ratios gradually lowered to improve capital efficiency. KSM, LCDOT, and LDOT are all relatively more risky, so we recommend increasing their liquidation thresholds to reduce insolvency risk.
Potential forced liquidations:
Whenever we raise liquidation thresholds, there's a chance that some users may immediately become liquidatable as a result. For KSM, the riskiest account has a collateral ratio of 1.46, so would not be liquidated by this change at today's KSM price. For LDOT, the riskiest account has a collateral ratio of 2.45, so would not be liquidated by this change at today's LDOT price. One large account borrowing against LCDOT, with $40k aUSD borrowed, is relatively close to being liquidated, though we do not expect it to be forced liquidated as a direct result of this change
By approving this proposal, you agree that any services provided by Gauntlet shall be governed by the terms of service available at gauntlet.network/tos.
For a second-grade student:
Gauntlet has some suggestions to make Acala and Karura safer and more efficient. They recommend changing the rules for how much money you need to have to borrow different types of cryptocurrency. They suggest making it easier to borrow some types of cryptocurrency and harder to borrow others. This will help make sure people don't lose too much money if the value of the cryptocurrency changes. They also say that some people might have to sell their cryptocurrency if these changes are made, but they don't think it will happen to many people.
No comments here