Collateral Factor 75% - Liquidation Bonus 3%
Collateral Factor 80% - Liquidation Bonus 5%
Collateral Factor 85% - Liquidation Bonus 9%
The WING collateral % should be adjusted higher to encourage more holders to borrow against their WING. 40% is too low. The liquidation bonus should then be higher. In some projects I dealt with 15%. Minting DAI, for example, has a liquidation penalty of 13% for any collateral: ETH, USDC, TUSD, LINK.
I suggest a simple experiment. Let’s create another clone of the Contract on the ONT Flash Pool for WING with a higher level of collateral and the liquidation bonus. Just another WING (66/13%) line in the Flash Pool. This choice will increase the appeal of WING ownership.
Your points that make sense:
- higher collateral factor increases capital efficiency
- WING should have a higher level of collateral ratio since it’s a VALUE TOKEN!
Things to discuss:
- if Collateral Factor increases with the Liquidation Bonus, then the liquidation risk will be higher. i.e. if a collateral token has 85%/9%, then the liquidation must be done within 6% price change of this token. Otherwise, lenders’ positions will be damaged
A easy way is to raise the collateral factor of WING to 60%, and maybe ONT/ONG as well. Did you notice the collateral factor of WING on BSC is 60%. I believe the team are trying to test it on BSC version first.