Removal of leveraged positions

MOC Change Proposal

Removal of leveraged tokens

Proposal

It is proposed to remove from the MOC model the positions with leverage greater than 1, called BTCx in the protocol.

Fundamentals

Initially, the protocol was conceived with leveraged positions, but this required the limitation that all DOCs were redeemed in the settlement.

To do this, an exit queue was implemented where users who wished to redeem their DOCs would enter them into that queue. When the settlement arrived, they would be redeemed and sent to their owners.

This, as is evident, would introduce an average delay in redemption of 15 days.

To mitigate this problem, a secondary market for DOC-RBTC had to be created.

For this reason, a decentralized exchange was developed.

Finally, in response to the community’s desire, the mentioned queue was eliminated and the protocol was enabled to redeem the DOCs immediately.

This caused an asymmetry in the model that is detrimental to it.

In addition, the leveraged positions introduced an important complexity to the model by adding a dimension, which is added to others such as the multipeg and eventually multi collateral.

This great complexity is inconvenient from the point of view of the purity of the model, which should not have embedded financial characteristics.

These features can and should be built into a layer outside and above the protocol.

Implementation

The implementation of this modification is very simple. A change must be made to the contract that inhibits the creation of leveraged positions. It can be done at any time after which new BTCx cannot be imposed. The BTCx that were valid at that moment will remain so until they are redeemed, which will happen at the latest in the next settlement.

4 Likes

I completely agree with your proposal.

we can later develop a full set of leveraged tokens on top of the protocol as a different layer.

2 Likes

I agree with the proposal

1 Like

I agree. The simpler, the better.

2 Likes

Excelente propuesta.

2 Likes

Great idea, Alejandro

2 Likes

Yes. More power to BPro.
Is this proposal going to be voted using the MoC tools system?

1 Like

We will certainly miss BTCx. But greater simplicity will enable and facilitate future developments, so LFG!

1 Like