bitshares1-core
bitshares1-core copied to clipboard
bitshares
Black Swan Resolution
When the first short is unable to fully cover at the price feed then all shorts are liquidated the price of the least collateralized short and any remaining collateral is returned to existing shorts. All USD orders in the order book are canceled and liquidated.
In this way all markets are always solvent regardless of price moves.
As we just discussed, the USD-denominated yield fund will help bail out insolvent shorts. The short holder won't get anything. Rather, in this circumstance, the order which matches the margin call won't be providing enough USD to pay off the short position's full debt. Any difference will be made up by the yield fund.
The black swan will only trigger when there is insufficient USD in the yield fund to cover this difference.
The thinking is that any losses due to a situation that leads to insufficient collateralization should be fairly shared by long holders as a whole. Since the yield fund belongs to the longs anyway, using it to bail out shorts isn't really unfair -- some forgone yield will probably be much less disruptive and costly to long holders than unwinding the whole BitAsset.
When the first short is unable to fully cover at the price feed then all shorts are liquidated the price of the least collateralized short and any remaining collateral is returned to existing shorts. All USD orders in the order book are canceled and liquidated.
Please don't do it this way!
Here is how I would like to see black swan events handled: https://bitsharestalk.org/index.php?topic=12489.msg164614#msg164614
http://bytemaster.bitshares.org/article/2015/01/27/BitAssets-and-Black-Swan-Events/