DEPENDENCY: IONv2
Accepted assets OSMO / ATOM (Highest risk) Accepted stables UST, eMoney, USDX (lowest risk) Accepted GAMM OSMO/ATOM pairs (lower risk) Risk parameter governance can widen spectrum of accepted collateral
All options require 150% collateral (what creates risk % lower in GAMM?)
Single asset collateral = Value of asset will fluctuate with market and be subjected to risk value = market volatility
GAMM as collateral = Superfluid staking options create more opportunity for collateral to gain value and lower risk ratio throughout the duration of the loan
CONCEPT FOR ACCEPTING GAMM OSMO/ATOM pair is submitted for loan of Proton. 100$ value of GAMM = 50$ value of Proton. That pool is given a 30% risk factor. You’ve deposited $50 usd value more that loan and if the value drops by $30 usd value you need to add more collateral or face a liquidation risk, in standard loan practice. The protocol can take the $30 of risk value and stake instead (thanks to super fluid staking) and earn on the risk portion of the original deposit. Half of the rewards from the risk portfolio are put back into the original deposit and lower the risk % and avoiding liquidation. The other half goes back into the reserves and pays governance fees. This is essentially paying off the loan with the collateral that you deposited, all with the risk portfolio of that deposit. You will also hold Proton and be capable of depositing Proton in a yield generating LP. You can use that yield to pay down the loan and increase borrowing power once you’ve come above risk + original deposit.
So by entering GAMM into the loan protocol you will be diversifying the holdings of the protocol, giving less risk to the reserves in the event of a bank run. You will be paying down your loan by with the risk portfolio assigned to the GAMM you deposit and you will be earning on the yield from the Proton loan given. This is a win-win scenario.