BIP#6 - Optimize Liquidation Mechanism

Summary

In order to better motivate liquidators to actively participate in the liquidation of unhealthy debts, the current liquidation mechanism needs to be optimized.

Motivation

When the NFT market price fluctuates, some NFT assets will become insolvent, that is, the debt is higher than the asset value. Liquidating these debts in time will help maintain the overall security of the platform.

Proposal

1. The bid penalty fine should only be paid to the first bidder. The current fine is paid to the highest bidder. In fact, the first auctioneer took the greatest risk and made the greatest contribution to the platform’s timely recovery of debts. Subsequent auctions are just normal market bidding behaviors.

2. The bid fine should only be based on debt. The current fine is based on the auction price, which is unpredictable and encourages malicious auctions, that is, only participating in the auction at the last moment for the sake of fines.

3. The bid fine ratio needs to be increased to 5% and it must be greater than the minimum value of 0.2 ETH. The current fine ratio is 1%, which is not enough to attract liquidation auctioneers.

Specification

All BEND stakers are members of BendDAO. Voting Quorum: 15M veBEND. Pass Rate: Over 50% Approve. The voting will last for 2 days.