BSIP: 0087
Title: Force Settlement Fee
Authors:
Jerry Liu [email protected]
Status: Installed
Type: Protocol
Created: 2020-02-23
Discussion: https://github.com/bitshares/bsips/issues/260
Worker: TBD
This BSIP provide a solution to charge fee from force settlement.
Force settlement is an important part in smartcoin design, it provides the power to smartcoin holders to ask for collaterals with reference to feed price, and then strengthens the peg of smartcoin.
The community continuously optimize the rules of smartcoin to balance the interests of relevant parties, taking bitCNY as an example, at the beginning the rules focus more on smartcoin peg but care less on debt position owners’ interests, change are done to give debt position owners more protection, the force settlement offset has been changed from 0 to 2%, the max settlement volume per maintenance period has been changed from no limit to 0.5% of smartcoin supply.
In the bull market at 2017, thanks to the help of magicwallet, bitCNY has played an important role in connecting CNY fiat and BTS-DEX, some projects selected BTS-DEX as the platform for token trading and bitCNY as the base currency. Things chanegd after implementation of BSIP76 and BAIP2, as these 2 proposals focus more on resisting shorting attack to BTS at the cost of lessening the peg, the difficult choice is made by community at the moment that shorting attack may lead BTS price to zero, after that bitCNY is more a trading asset/derivative in BTS-DEX than a stablecoin, it will still play a great role in leveraging and risk controlling in BTS ecosystem, however it will not be an always exactly pegged stablecoin.
At the same time, BTS community continuously review the strategy, one strong consensus is that the system need to charge more fee at the suitable transactions to increase system income to pay public expenditures and buy back BTS. BSIP74, BSIP86 all come out at this background, it is also necessary to provide the possibility to charge from force settlement.
In the past several weeks, force settlement happened more intensively than before, the background is that the crypto market seemly switched from bear to bull, and BTS price went above 0.22CNY - which is the voted threshold per BSIP76, at some time the frequently happened force settlements made the lowest debt position collateral ratio even higher than 3, this phenomenon triggered warm discussion, almost all the users agree that the settler need to pay more cost while executing force settlement, and the cost will be paid to system as fee.
Surely this BSIP just provide the tool to charge from froce settlement. whether the charge will go alive depends on the decision of the smartcoin owner.
Force settlement fee can be seen as to pay part of the cost for smartcoin supply, stabilization and also the liquidation of collaterals, it is irrelevant to market fee sharing. To ensure the debt positions can always be closed with suffcient smartcoin, it is more feasible to cut off part of the traded collaterals as fee, instead of smartcoin.
Add one new parameter Force Settlement Fee Percentage(FSFP) for each smartcoin, which is controlled by the smartcoin owner.
FSO is Force Settlement Offset of the smartcoin.
When a force settlement is executed, the buyer sells smartcoin with quantity X and get collateral in quantity X*(1-FSO)*(1-FSFP)/feed price price*, the settled debt position owner sells collateral in quantity X*(1-FSO)/feed price* and get smartcoin in quantity X, the delta in paid and received collateral in quantity X*FSFP*(1-FSO)/feed price* will be paid to the owner of the smartcoin as force settlement fee.
In this scenario, as a price offset parameter, FSO is irrelevant to fee charging, it just define force settlement price = feed price/(1-FSO). and the force settlement fee is paid in collateral and the amount is calculated out based on force settlement price and FSFP.
This document is placed in the public domain.