/biz/ - Business & Finance

[Anonymous No.27203772]

Post your face after reading about Union's Collateral Optimization feature and knowing you're going to make a killing

[Anonymous No.27204143]

>>27203772

Brainlets wont get it anon, they're too damn lazy to read and be woke.

Comfy being only few high IQ chads buying premium price

[Anonymous No.27204361]

Lovely

[Anonymous No.27204411]

I tried to convince biz to look into Union but they seem to only be interested after a huge pump.

[Anonymous No.27204417]

>>27203772

[Anonymous No.27204553]

>>27203772
>>27204143
>>27204361
>>27204411
Teach this smooth brain then...

[Anonymous No.27204959]

>>27204553
From this article

https://medium.com/union-finance-updates-ideas/product-update-issue-2-by-the-numbers-economic-advantages-of-c-op-c602af18d7ac
>Outcome One — Price of ETH Gaps up to $1,500
No C-OP
If the price of ETH surges to $1,500 during her open position on Compound, Alice’s 10 ETH is now worth $15,000 alongside her $5,000 of DAI, with no fear of liquidation. Alice’s borrowing capacity has increased by $5,000, meaning she now has an additional borrow factor of $2,500 in DAI.
Now, Alice’s borrow capacity, rather than being 100%, is 67% as the ratio of her ETH value relative to the size of the loan has decreased. Alice is not at risk of liquidation.
Optimized with C-OP
With C-OP, in addition to the $2,500 increase in ETH with C-OP, Alice has an additional $1,250 free borrowing capacity due to C-OP. In other words, Alice has a total of $3,750 in extra borrowing capacity. Additionally, Alice’s borrowing capacity is only at 50%, rather than 67% without C-OP.
Alice now has a sizable advantage in capital efficiency using C-OP during positive price momentum with her open position on Compound.

[Anonymous No.27205008]

>>27204959
>Outcome Two — Price of ETH Gaps down to $950
No C-OP
With the price of ETH gapping down to $950, Alice’s account liquidity becomes negative since the borrowing value of her ETH holdings has decreased to $4,750. With Alice’s borrowed amount of $5,000 in DAI, her current borrowing capacity is 105% with account liquidity at -$125.
A liquidator will step in to liquidate the account back to the 25% CFPL.
The total collateral needed to free up and restitute Alice’s position is $1,437.50 since the amount to be liquidated to restore the CFPL is $1,187.5 (25% of the borrowing capacity of $4,750 = $1,187.5) ) plus the -$250 of current negative liquidity.
As a result, the amount of Alice’s ETH collateral sold off at a current price of $950/ETH is 1.51 ETH.
Optimized with C-OP
In this scenario, we can highlight C-OP’s power to protect Alice’s collateral in volatile, downward market conditions.
When the ETH price gaps down to $950, Alice’s account liquidity decreases by the same amount as no optimization (-$250). However, because there is excess collateral of $1,250, Alice still has an excess capacity of $1,000. With a borrowing capacity of 79 percent and positive account liquidity, Alice is not liquidated.
This is worth repeating: liquidation does not even trigger for Alice’s position.
Overall, Alice’s liquidation savings are 321%, using a simple calculation of the value of ETH sold in case of liquidation when not optimized divided by the cost of buying C-OP. We don’t even factor in the opportunity cost of losing the 1.51 ETH or the liquidation fees that range between 5–15%.
Interested? It gets better.

[Anonymous No.27205102]

>Outcome Three — Price of ETH Gaps down to $749.998
No C-OP
In this scenario, the ETH price declines further, hitting $749.998. Alice’s account liquidity is now even more in the red, at -$1,250 relative to the borrowed amount of $5,000 in DAI and borrowing capacity is now 133%.
The liquidator brings the account back to CFPL by liquidating $937.495 of ETH ($750 * 10 ETH * 0.5 Borrow Factor * 25% CFPL = 937.4975) on top of the negative $1,250 in negative liquidity for a total of $2,187.51 worth of ETH.
The liquidator has now sold off 2.92 of Alice’s ETH collateral to restore her account to good standing.
Optimized with C-OP
Alice’s account liquidity is also negative, but only at -$0.01, with basically 100% usage of her borrowing capacity. Her position enters liquidation, and the collateral to be liquidated to reach parity with the CFPL is $937.51 (same as the no C-OP case) plus only the negative $0.01. Furthermore, C-OP is exercised by the lending protocol equating to the recovering amount = (strike — current price) * number of contracts bought = ($1,000 — $749.998) * 2.5 = $625.
After subtracting the C-OP covered amount, the remaining balance of collateral to free up is covered by selling ETH, for a total of 0.41667 ETH sold. This is compared to the no C-OP amount of 2.92 ETH sold.
Alice’s liquidation savings of 288% are a vast improvement over sharp downward price swing cases without C-OP.