P-ratio Adjustments ℓIP: To be Implemented on 24/10/2022
Dear Linear Community,
On September 3, 2022, the Linear DAO voted and approved ℓIP: P-ratio adjustments on Snapshot. This represents one of the most significant changes to the protocol that has been approved by the community. We have created this post to go over the details and implications of said adjustments that will take place on Monday, October 24th.
P-ratio to Build ℓUSD & Claim Rewards
- Reduced from 500 → 450
The minimum P-ratio required to build ℓUSD and to claim weekly LINA rewards has changed from 500 to 450. This will allow users to claim rewards and build ℓUSD on Linear Buildr at a lower P-ratio, thus increasing the amount of ℓUSD in circulation.
P-ratio to Remove Liquidation “Marking”
- Reduced from 500 → 400
If a user’s account has been marked, meaning their P-ratio has fallen below 200. Users will no longer be marked for liquidation if they restore their P-ratio to 400 or above (previously 500).
Note, that if a user restores their P-ratio to above 400 but below 450, other community members will not be able to liquidate them, but the user will also not be able to claim weekly rewards as mentioned in the above change P-ratio to Build ℓUSD & Claim Rewards. This change will allow users to restore their P-ratio and unmark accounts at a lower required ℓUSD amount.
Users who use the Linear Debt Terminator can liquidate marked accounts up to a maximum P-ratio of 450 and allow liquidated users to claim weekly rewards, even though the liquidation mark can be removed from a P-ratio of 400.
Liquidation Delay Time
- Reduced time frame from 72-hours to 48-hours.
Marked stakers will have a 48-hour time frame to deposit additional LINA or burn ℓUSD to return their account to above a 400 or above P-ratio. If the P-ratio of the marked account fails to return to above 400 within the 48-hour time frame, the account would be subject to liquidation.
P-ratio to “Mark” Accounts for Liquidation
- Keep liquidation marking at 200
Remains the same to ensure the overall healthiness of the protocol.
We consider the implemented changes mentioned above will allow users to claim rewards at a lower P-ratio and build more ℓUSD for the same amount of collateral. Additionally, in our efforts to stabilize the ℓUSD peg, we believe that it will also have a secondary effect on the peg, since the buy pressure from the need to restore P-ratio has been lowered. The team will continue to monitor this situation, and in case needed will consider other alternatives to achieve peg for ℓUSD.
Linear Finance Team
About Linear Finance
Linear Finance is a cross-chain compatible, decentralized delta-one asset protocol that allows users to get synthetic exposure to various assets, including cryptocurrency, commodities, and market indices. Users can utilize our cross-chain swap functionality to instantly swap assets across leading blockchain environments and DeFi protocols with unlimited liquidity and zero slippage.