The idea of a overdraft is ok, but I think it breaks the mechanism a bit. ANC uses collateral to power the earn side. If people start using overdraft, how will the earn side get their interest. so while it might be good for one side, it strains the other… unless we charge some other kind of interest on the ‘potential’ overdraft size… but by the, your just better off sticking it in as collateral no?
Now if we start using other things it introduces a lot of risks, and different kind of risks.
-
The obvious ones are liquidity & volatility. how liquid is that PEEP coin? can we actually exit it if need too
-
The other kind is secondary risks… what happens if PEEP uses anchor behind the scenes. are we creating feedback loops when we liquidate?
Another approach I like is time based margin call protection
What if Anchor charged a bit of a higher rate, but it stopped liquidations from occurring for say X minutes/hours? say 1% for 10-minutes, and 5% for 1-hour, and 15% for 6-hours (making the numbers up obviously. I’m not a quant).
This would give the end-user a chance to liquidate other holdings, and fix their LTV, as well as reduce some of the bumpiness (like the $9 drop that happened, which quickly recovered a bit).