SCCP-260: Update Synthetix Liquidation Parameters
Author | |
---|---|
Status | Implemented |
Type | Governance |
Network | Ethereum & Optimism |
Implementor | TBD |
Release | TBD |
Proposal | Loading status... |
Created | 2022-12-07 |
Simple Summary
This SCCP proposes to implement the following:
- increase the
liquidationRatio
from 145% to 175% - increase the
snxLiquidationPenalty
from 45% to 75% - increase the
selfLiquidationPenalty
from 40% to 70%
Abstract
liquidationRatio
is the ratio below which stakers can be flagged for liquidation, after theliquidationDelay
of 8 hours,the flagged staker is liquidated.liquidationPenalty
is the penalty paid to other stakers who take on the debt of the liquidated account.selfLiquidationPenalty
is the penalty paid to other stakers, when a staker liquidates his debt to the target collateralization ratio.
Motivation
The motivation for pushing up these parameters are as follows:
- 1-Year short funding rates on SNX has been been historically around 75%. If a staker who earns liquidation rewards and wants to hedge his escrow, he can't sell it and has to pay an 75% funding rate. So a penalty of 75% would bring the net present value of the debt assumed in line with that of liquidation rewards.
- Increases the incentive on stakers to repay their debt.
- Increases the incentive for stakers to bring additional capital into the system to take on the liquidated snx of fallen brothers.
Copyright
Copyright and related rights waived via CC0.