Adding SOV as a Collateral Type in Sovryn?

Just my 2 SATs… I really like this idea, but personally would wait with it.

SOV just started - 2 weeks of trading is very little time. Let’s define low volatility first… SOV dropped like 30% recently. Is that low volatility? We need some trading history and exposure for other markets - just to experience what will happen and how SOV will behave. To see how market will react to SOV.
And there are still a lot of other things to take care of first - like rewards for SOV staking. I want SOV to be as strong as possible. I wish this project and community all the best. I want it to be secure.

If we want to use SOV as Collateral - or in future add any other coin as Collateral - I could imagine another type of staking used on SOV platform - Staking as Collateral - without benefits like rewards and governance - to motivate borrowers to pay back ASAP.

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Given that SOV is thinly traded and easy to manipulate, I think it might be susceptible for someone with a big wallet to do liquidations. The idea is good as it value add to the use case of SOV but what are the safeguards for those that does it? Will there be an option for people to pledge other assets such as USDT to act as a safeguard during price volatility? In the end, I want to use my SOV but also want the flexibility to use other assets to avoid liquidation when price of SOV dives due to various reasons.

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We gotta pay maximum 50%Tax for Cryptocurrency profit here in Japan. I really love the scheme and hope that works good for all over the world:)

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I thought SOV wasn’t an altcoin?

It’s not. Altcoin is trying to be exclusively money. It’s value is derived purely from monetary premium and not some value like cash flow or underlying asset.

SOV is more like equity which can have moneyness to it since it’s tokenized and is tradeable but no one confuses equity for money in the analog world.

The same applies here imo.

I agree. It seems likely that volatility will increase significantly once it being trading outside the Dapp and volatility is not an ideal quality for collateral.

The idea is good. And possibly a little early. I’d say put it on the agenda for after the bridges have launched, multiple markets exist, and we have a bit more info about SOV’s stability/volatility track record.

The only argument for hastening this is Yago’s nr 4:

  • For the SovrynBTC peg, SOV will be the collateral asset. It would be beneficial to start experimenting with its use as such before the peg is deployed.*
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Love your suggestion. I am working in the gaming field with an OTC holding collateral on a repo agreement at 50% LTV and that seems pretty standard. With sufficient behavioral history - you could incentivize via tiering and dropping LTV on a participant level to 60% , 70%, 80% etc. Regardless - this could help address one of the key weak points I see in the current Bitocracy models. The LP pool can be offset directly with APR but this would be awesome for committed Stakes!

Is there any progress on this subject?

I would love to be able to leverage my SOV holdings. I’m a believer in the project. I do think, however, that we are quite early and allocating capital into SOV is not really optimal right now. There are not that many options to make that capital efficient and I would love to be able to trade BTC with my holding.

Thanks!