Reduce default borrow options on Abracadabra to promote more responsible leverage

1. General Discussion
#1

Over the past two weeks we’ve seen the price of TIME tumble. This is likely in big part due to leverage liquidations. Liquidations are costly to Wonderland in multiple ways:

  • Wonderland supporters who are liquidated lose money
  • The price of TIME can fall quickly and drastically
  • The drop in price of time can make interested people afraid of investing in Wonderland

Abracadabra is putting novice investors at risk by having a very high default borrow rate on Abracadabra. The price of TIME is likely to remain volatile and it’s easy for novice investors to overlook just how likely it is for them to get liquidated.

The proposal is to reduce the default borrow options on Abracadabra from (25%,50%,70%)
to (10%,25%,50%) to promote more responsible use.

Alternatively we can default borrowers to an amount that leads to the liquidation price being half of the backing per time. So for example today’s backing per time is $1730. Abracadabra would show a default borrow amount relative to the collateral deposited that would lead to a liquidation at $865.

Either way, borrowers would still have full freedom to borrow as much or as little as the protocol allows. We’d just show more conservative default options so that novice investors don’t borrow more than what is safe.

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Repay all liquidations under backing price!
#2

Wdym by default borrow rate?
Abracadabra has you choose your leverage percentage.
However, I would agree that perhaps we could make the buttons less but the box as much as they want.
Currently the buttons are 25%,50%,70%.
Maybe we could have the buttons at 10%,25%,50% to promote more responsible use.

A dynamic suggestion based on the backing price is also a good idea.

Abracadabra only screams at you about risk when you open the looping/change leverage tbh. Even though when you manually loop you are inheriting that same risk: losing 100% of what you put in.

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#3

This was great feedback Patchy319. I updated the proposal to incorporate some of your feedback and make the suggestion more clear.

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#4

I support this proposal! Responsible leverage should be encouraged

#5

The problem with this, is this would be an Abracadabra proposal and not a Wonderland proposal.

Now, I understand the why. Make sense.

However, why would Abracadabra vote to have something that give them money changed to something that will reduce how much they make? Maybe, they would to be nice and promote to ecosystem? Who knows.

Might be a nice discussion to have, just don’t see much happening on this side of things unless the devs get involved and/or a proposal is made on the Abracadabra side of the house.

3 Likes
#6