BitShares

<p>Market-pegged assets (MPAs) or Smart Assets on Bitshares blockchain are collateralized digital assets that are designed to track the price of anything, such as a currency or commodity in order to margin call collaterals automatically to secure value of Market-pegged assets. </p><p>MPAs are backed by a collateral asset, which is held in reserve to ensure that the MPA maintains its value throught feeding a price to the margin call engine. For example, if the MPA is designed to track the value of the US dollar, it may be backed by a collateral asset such as Honest.USD, which is a stablecoin that is pegged to the value of the US dollar and Maintained by BitShares Honest Community.  </p><p>As a margin loan encumbered borrower of an MPA token, you can profit by borrowing the MPA token and using it to purchase other assets that you believe will appreciate in value. For example, you might borrow Honest.USD and use it to purchase BitShares (BTS), which is the native token of Bitshares blockchain. If the value of BTS increases, you can sell it for a profit, pay back the borrowed Honest.USD, and keep the remaining profit. </p><p>However, it is important to note that margin loans carry a risk of default, which means that you could lose your collateral if the value of the MPA you borrowed drops below a certain level.  </p><p>As an unencumbered holder of an MPA token, you can profit by holding the MPA and waiting for its value to appreciate. For example, if you hold Honest.USD and the value of the US dollar increases, the value of your Honest.USD will also increase. </p><p>You can then sell your Honest.USD for a profit. It is important to note that the value of an MPA can be affected by various factors, such as market demand, changes in the value of the underlying collateral asset, and changes in the broader economic environment. </p><p>In summary, there are several ways to profit from MPAs on the Bitshares blockchain, both as a margin loan encumbered borrower and as an unencumbered holder. However, it is important to carefully consider the risks and potential rewards of any investment and to do your own research before making any financial decisions.</p><h2 id="header-0">Borrowing &amp; Covering</h2><p>BitShares Blockchian is capable of minting any MPA, with any collateral, without any interest rate.</p><p>A borrow/short position can be closed by hold the same amount of that particular MPA. When the particular debt is payed back to the network, the corresponding supply is reduced and the collateral is released.</p><h2 id="header-1">Manual Collateral Settlement</h2><p>When the asset owner allows force settlement, the MPA can be exchanged at Feed Price &#43; FSO &#43; FSS, after the settlement time and max. settlement volume. The settlement closes the borrow/short positions with lowest CR and sells the collateral to the asset settler.</p><h2 id="header-2">Automated Collateral Settlements</h2><h3 id="margin-call-first-level-settlement">Margin Call (First Level Settlement)</h3><p>The margin call sells collateral, to buy shares of the borrowed MPA back and reduce the amount of debt. The margin call will occur, when the CR is lower than the MCR and a bid is equal or greater than the Call Price (CP): &#61; DEBT / COLLATERAL * MCR. The borrower is able to add extra collateral or reduce the debt, to increse his CR and prevent further margin calls.</p><h4>MSSR</h4><ul><li>Higher MSSR allows faster liquidation and higher penality. Real liquidation penalty is dependend on market liquidity.</li><li>An MPA premium reduces the effective MSSR.</li><li>Higher MSSR reduces the <em>effective CR range</em> (MCR-MSSR) for margin calls.</li></ul><h3 id="response-methods-second-level-settlement">Response Methods (Second Level Settlement)</h3><p>When the <em>effective CR</em> (MCR-MSSR) of the least collaterized position is 1, there are four different options handling the collateralization breaking point.</p><h4>Global Settlment (Default)</h4><p>All debt positions are closed, all or some collateral is moved to a global-settlement fund. Debt asset holders can claim collateral via force-settlement. It is not allowed to create new debt positions, when the fund is not empty.</p><h4>No Settlement (Disable Global Settlement)</h4><p>No debt position is closed, and the derived settlement price is dynamically capped at the collateral ratio of the debt position with the least collateral ratio so that all debt positions are able to pay off their debt when being margin called or force-settled. Able to adjust existing debt positions or create new debt positions.</p><h4>Settlement To Fund</h4><p>Only the undercollateralized debt positions are closed and their collateral is moved to a fund which can be claimed via force-settlement. The derived settlement price is capped at the fund’s collateral ratio so that remaining debt positions will not be margin called or force-settled at a worse price. Able to adjust existing debt positions or create new debt positions.</p><h4>Settlement To Order</h4><p>Only the undercollateralized debt positions are closed and their collateral is moved to a limit order on the order book which can be bought. The derived settlement price is NOT capped, which means remaining debt positions could be margin called at a worse price. Able to adjust existing debt positions or create new debt positions.</p><h3 id=""></h3><h3 id="for-more-information">For More Information</h3><p>Official GitHub Website: <a href="https://bitshares.github.io/" rel="noopener noreferrer nofollow">https://bitshares.github.io</a></p><p>Official GitHub Repositories: <a href="https://github.com/bitshares" rel="noopener noreferrer nofollow">https://github.com/bitshares</a></p><p>Official Telegram Group: <a href="https://t.me/BitSharesGroup" rel="noopener noreferrer nofollow">https://t.me/BitSharesGroup</a></p><p>Official Development Telegram Group: <a href="https://t.me/BitSharesDEV" rel="noopener noreferrer nofollow">https://t.me/BitSharesDEV</a></p><p>BitShares Reference Wallet: <a href="https://bts.exchange/" rel="noopener noreferrer nofollow">https://bts.exchange</a></p><p></p>

Automated Collaterals Settlement over BitShares Blockchain Market-Pegged Assets

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