Chainlink is arguably one of the most reputable, trusted, and valuable blockchain protocols, ranked the 10th largest coin by market cap at nearly $13B.
I am proposing adding a market for $LINK as a collateral asset.
Here are a few reasons why we should do so:
Used as collateral. Ideally, I think anyone should be able to borrow against any of their assets provided there is a market for it. The more assets we support, the greater financial freedom and capital efficiency we offer to DeFi users around the globe. This is especially important for the unbanked.
OTC desks can quickly borrow at market rates to sell large amounts of tokens to their clients without much delay. Borrowing this way is much less risky for them to operate than for them to constantly hold large amounts of various volatile tokens.
Allowing for strategic governance voting using borrowed tokens.
It is true that there is a risk when adding any asset as a collateral asset. While there is a risk, offering more collateralizable markets increases the value of the compound protocol, increases the utility of DeFi and crypto, and provides more financial freedom and capital efficiency to users (especially the unbanked).
To ensure the safety of the Compound protocol, we must carefully manage risk. In this case, we can do this by fine-tuning the collateral factor, reserve factor, and borrowing limits for $LINK.
I’d like to open up a discussion as to what the optimal initial values of these risk-related factors should be.
Once we come to a majority agreement on this, I will deploy the contracts and create an autonomous proposal to be voted on by everyone. $LINK is already in our price feed, so this is fairly simple to do.
So with respect to $LINK, what do you think are optimal initial values for:
- Collateral factor
- Reserve factor
- Borrowing limit
Thanks for reading,
TylerEther / TRiLeZ