Did you know that the @anchor_protocol liquidation mechanism got fully decentralised?
Here's everything you need to know...⏬⏬
Here's everything you need to know...⏬⏬
If a borrower's LTV goes over 70% of their collateral...
Their collateral gets liquidated.
And other users can bid to win the borrower's collateral at a discount.
The problem?
The bids were considered on a first-come-first-serve basis...
Even if a bidder sets a premium rate.
Their collateral gets liquidated.
And other users can bid to win the borrower's collateral at a discount.
The problem?
The bids were considered on a first-come-first-serve basis...
Even if a bidder sets a premium rate.
Plus:
Only bots could execute the bids...
Since everyone is competing with each other to win the collateral.
The consequence?
It prevented the average user from participating in liquidations...
As the only way to win was to come first in this race.
However, that changed...
Only bots could execute the bids...
Since everyone is competing with each other to win the collateral.
The consequence?
It prevented the average user from participating in liquidations...
As the only way to win was to come first in this race.
However, that changed...
@anchor_protocol proposed a new liquidation queue mechanism in Oc '21.
Here's the details:
forum.anchorprotocol.com/t/proposal-int…
What changed?
Under the new system...
The liquidations will not be prioritized by speed.
That means first-come-first-serve doesn't matter.
What matters is...
Here's the details:
forum.anchorprotocol.com/t/proposal-int…
What changed?
Under the new system...
The liquidations will not be prioritized by speed.
That means first-come-first-serve doesn't matter.
What matters is...
The premium rate.
The liquidation bids are prioritized based on the premium rate a bidder sets.
Lower the premium = Higher chances of winning the collateral.
How does this increase decentralization?
It isn't an anxiety-ridden race to be the first to bid anymore.
So…
The liquidation bids are prioritized based on the premium rate a bidder sets.
Lower the premium = Higher chances of winning the collateral.
How does this increase decentralization?
It isn't an anxiety-ridden race to be the first to bid anymore.
So…
Your bids are considered even if you are the 100th bidder.
Plus:
Bots don't have the sole discretion to execute bids since speed is irrelevant.
In fact:
They aren't required at all.
Now all participants get a fair opportunity to bid for winning the collateral.
Because…
Plus:
Bots don't have the sole discretion to execute bids since speed is irrelevant.
In fact:
They aren't required at all.
Now all participants get a fair opportunity to bid for winning the collateral.
Because…
Their premium rate determines whether they'll win or not…
Not when they submit the bid.
So, how can you become a bidder?
All you have to do is submit your bid + a premium rate.
Then you wait for the 10 min waiting period to pass to activate your bid.
Next:
Not when they submit the bid.
So, how can you become a bidder?
All you have to do is submit your bid + a premium rate.
Then you wait for the 10 min waiting period to pass to activate your bid.
Next:
The liquidation queue is arranged in the order of the premium rates submitted.
Lower your premium rate = Higher up the queue your bid is.
And, higher your chances of winning the collateral.
This is how...
Anchor unlocked a new door for the average user to participate fairly.
Lower your premium rate = Higher up the queue your bid is.
And, higher your chances of winning the collateral.
This is how...
Anchor unlocked a new door for the average user to participate fairly.
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