Lower collateral requirements & remove rewards threshold

Agree on lowering LTV to 35%, but don’t think the BALN loan rewards should go to 0. Slightly lower sure. With bnUSD being very new having that incentive to mint is important.


In my opinion

  1. It is necessary to reduce the balanced compensation for the borrower. The compensation for the borrower can be seen as a kind of early user benefit. Basically, when we get a loan, we pay interest.
    Therefore, from one year after the launch of Balanced, we have to pay an annual interest rate of 1% as interest on the loan. Or, if you want to keep the loan without interest, you must burn your Balanced every 3 months (1 Balanced every 3 months)

  2. I agree ltv 35%
    It is still very volatile due to its small market cap, so it is necessary to limit it for users.

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Thanks everybody for the excellent feedback!

@bwhli look what you’ve done lol nobody can hold back from talking about borrower allocations. Don’t worry folks we’ll have another thread on this. It’s taking me a bit of time because I need to iron out the BALN token econ, which effects whether or not it needs a specific allocation from rewards. The two proposals are coupled, and I need to finish the token econ first in order for it all to make sense.

Having said that, I do appreciate the feedback and we’ll probably land somewhere in the middle. I may trim some comments on this thread that are specifically about reward allocation just to keep everybody focused, but rest assured, feedback is noted and please come back to comment on the new thread when I post it


1.) The rewards threshold is the 20% LTV. Going forward, there would be no specific threshold to be eligible for rewards. We may even need to remove the 50 bnUSD minimum. This is because of smart contract architecture and being able to offer block-by-block rewards. Additional logic can make this impossible, so less logic the better

2.) See above, there would be no more rewards LTV. It would be the maximum LTV, then same liquidation rules (~67% LTV is liquidation).

And yes, block-by-block rewards would stop people from needing to be locked in LP for 24 hours.

  1. I think we could take a leaf out of Anchor’s book and make the “recommended” LTV 35% with a maximum LTV of 50%. I do think we could also increase the liquidation LTV to 75% this providing greater protection of people’s collateral.

Also think that removing the reward threshold does simplify things which it’s always welcomed in a complicated industry like defi.

Well done on all the updates to date. Balanced is really coming together and looking forward to the addition of new assets and increased adoption.

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  1. Although it’s nice receiving baln rewards for taking out a bnUSD loan, we know it’s not sustainable long-term. By simply leverage a loan and holding bnUSD in your wallet does not add any value to the ecosystem (apart from the 1% origination fee).

I do think it’s a good idea to do away with the loan rewards as it would disincentivize people from doing this.

Instead I think that we need to rather look for ways to make bnUSD more usable.

I assume that when OMM launches, we’ll be able to transfer/convert bnUSD and earn interest on OMM.

If there is any consideration for moving the maximum LTV even higher, I would be all for that too. I"m not sure what the implications would be, but having more flexibility to use balanced how we want I think is better.

I’m still all for removing the reward threshold since the benefits of block-by-block rewards are clear in terms of how they impact liquidity pools.

Definitely agree on this one!

I agree with both points. The excellent risk ratio info available should be plenty enough for anyone to grasp the risk they are undertKing

I do like this suggestion, I was going to suggest a potential membership level for the user but something like this would be great.

As I understand it, the likely reason the liquidation ratio is comparatively higher is that on liquidation it doesn’t ‘sell’ the collateral to get back the bnUSD, its held in a bad debt pool that erases the actual debt when the next time the peg falls out of sync and people retire bnUSD for ICX , thats when it ‘sells’ the collateral from liquidations. In this way its possible if the price moves before that happens that even with that safe ratio the debt is not recovered/recoverable.

If it would directly sell (if the DEX terms are favourable) it could go lower? Maybe with altruistic rebalancing lossely pegging the DEX to the oracle, and the oracle price itself being the one that determines the liquidation threshold it would be safe to lower the liquidation threshold.

At least thats my take on it.

Agree with this point. :clap:

Back this proposal fully. I think 35 percent is still conservative, so it’s an easy " yes" from me …

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I do support lowering collateral as proposed. I’ll hold off my comments on rewards and why I do not support it in the way described.

Put it to the vote! the ayes have it.

-increase loan value to 35% of collateral value
-remove reward threshold

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I like the suggested changes.

So, I would like to start with complimenting to the new forum where an in depth discussion takes place.

OT, I miss the discussion on what would the most optimal LTV ratio be. I myself do not know this, however looking at other DeFi projects can be insightful but without knowing why they are changing or having 35% it is pointless to compare in my honest opinion.

Moving to 35% can be optimal, but why not immediatly go for 50%. For me this would be ok as well. I understand that with the volatility of crypto as a whole, this would imply serious risk management. However, it can also provide serious opportunities when the utility of Balanced increases.

The last question I have is what is best for utility of the platform. If that is 35%, than OK for me. But let’s say 50% LTV attracts more users, this would be more appealing to me.

What are community members thinking on their preferred LTV %?

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I agree with you. A higher LTV limit allows people to really leverage their crypto portfolio at a 0% interest rate rather than having to take out more traditional loans. I do think it will attract more users to balanced. I’m even supportive of a 1% p.a interest rate on bnUSD loans as a way to generate more fees for baln holders. A 1% interest rate is still phenomenal! Plus if you can then convert it into another stablecoin like ust and earn through anchor or usds on OMM.

Awesome discussion, great to see the interaction from the community.

I’m curious when we might see a proposal surrounding this discussion?

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Announcement coming soon to vote on these topics!