BSIP: 0074
Title: Margin Call Fee Ratio
Authors:
Jerry Liu bitcrab@qq.com
Status: Draft
Type: Protocol
Created: 2019-09-07
Discussion: https://github.com/bitshares/bsips/issues/164
Worker: TBD
This BSIP provides a solution to charge a fee for margin call trading.
The BitShares community has become more and more aware that BTS need a powerful economic model. One simple selection is to charge for trading and use the accumulated fees to buy back BTS, as is done with many exchanges' platform tokens. The continuous income can help to provide smartcoin liquidity and sustain the price of BTS. Margin call trading has the potential to make a large contribution to the income of the system. However, up until now margin call trading is not charged for. We need to find a suitable way for this to add to the system's income.
A margin call fee can be seen as a way to pay part of the cost for smartcoin supply and stabilization. It is unrelated to market fee sharing.
To ensure the debt positions can always be closed with suffcient smartcoin, it is more feasible to charge part of the traded collaterals as the fee, instead of the smartcoin.
As the margin call fee ratio may be obviously higher than market fee, the margin call orders should be placed at the actual price without margin call fee. This will avoid misleading the buyer.
Add one new parameter Margin Call Fee Ratio(MCFR) for each smartcoin, which is controlled by the smartcoin owner.
Case 1: In the case of the call order being the maker,
Margin call match price = settlement price/(MSSR-MCFR).
Here settlement price is a new parameter introduced as part of BSIP71. Note that settlement price = feed price when there is no bad debt.
When margin call trading happens with the call order as the maker, the buyer sells smartcoin with quantity X and get collaterals in quantity X*(MSSR-MCFR)/settlement price, the margin call order owner sells collaterals in quantity X*MSSR/settlement price and get smartcoin in quantity X, the delta in paid and received collaterals (quantity X*MCFR/settlement price) will be paid to the owner of the smartcoin as the margin call fee.
Case 2: In the case of the call order being the taker,
Margin call match price = settlement price/MSSR.
Note that MCFR does not come into play for order matching in this case, but it is involved in the calculation of collateral that is returned to the call order owner.
When margin call trading happens with the call order as the taker, the buyer sells smartcoin with quantity X and receives collateral in quantity X*MSSR/settlement price, the margin call order owner sells collateral in quantity X*(MSSR-MCFR)/settlement price and get smartcoin in quantity X, the delta in paid and received collaterals (quantity X*MCFR/settlement price) will be paid to the owner of the smartcoin as the margin call fee.
This document is placed in the public domain.