Credit/debt swap on MARS PROTOCOL

I was thinking what mars protocol would need.
so i like the idee of a credit/debt swap LP for portfolio management in mars portocol.
Where you can balance your deposit or debt assets Long or Short based protocol liquidity.

This would be done on the mars protocol side through (G)UI(/code). Just like the yield/farming tab with nice looking (G)UI.

The swapping of risk can be done over time by user.
The swapping would be based on the protocol liquidity and not on market liquidity.
New deposits would not change the amount/balance of the rest of tokens.

One important think is that this would be possible even if the users borrowing cap is max out/ close to being liquidation. this maxing out borrowing cap can be punished with fees if needed.

UI Idee below

Maybe the can also be a time line graf based on deposits and portfolio balance.
Like in the foto below

Like to hear feedback about this idee

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It’s an interesting idea, but I’m having trouble following along. What use cases would this allow for Mars users?

I am really looking for a bear/downside market strategies.
I think that the volume and the APY/yield on thing like xMars or Mars and even ANC / LUNA is very low.

There for shorting the LUNA token by borrow it. Selling that token for UST. and then being able to sub instantly swap within the mars protocol to more long balanced strategie when trends change. The use case is mainly trading actively on daily bases. And being able to short in DeFi. What currently very difficult is. A second option is for future market arbitrage, new forms of yield aggregation. or just longer term call/put options to get TFI/CeFi in to the Luna(DeFi market).

The possible fast moving market arbitrage moments by filling order/difference in LP form inside the mars protocol with outside tokens is very powerful.

I see. That use case seems to be already covered by Mirror protocol, do we need to reinvent the weel on the Terra ecosystem?

reinvent the wheel. Mirror protocol is wrapped stocks.
What i would like to see is a way to manage my token balance within Mars protocol.

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I like it. We would see increased volume and new markets for managing positions, attractive for daily/more involved traders.

It’s not reinventing the wheel. It’s blowing the doors off the whole vehicle. Things are still pedestrian right now, we want moar :smiley:

2 Likes

Just wanted to see if I’m getting it correctly,
Having it displayed on the UI as a long position when depositing asset and short on the borrowed asset and then enabling swaps inside the protocol itself, without the need to go through payback borrow → withdraw deposit → deposit (initially borrowed) asset → borrow( initially deposited) asset… ? Kind of like Aave v2s repay with collateral but with swaps instead?
If I’m getting it correctly I think that would be a great feature to have and a great idea! Also to have assets on the UI as long and shorts would be really nice.

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Not realy between deposits and borrowing. But more like this.

Long balanced (price Luna: 55$)
Long by deposits: luna at 65% anc at 15% and ust at 10%
Short by borrowing ust 45/65% anc 5% luna 10%

2 days later
Now the luna starts burning. Price is going up.

Long rebalanced (price Luna: 70$)
Long by deposits: luna at 60% anc at 10/15% and ust at 15/20%
Short by borrowing ust 45/55% anc 5/10% luna 10/15%

4-10 days later
Luna continues to burn. Price is going up now with hype. Some start selling most of there luna bags at want to start a short. TVL is at above 85%.
Because of 2x yield farming with an anc/ust pair.
And you still what to rebalance to short.
This is where the swap pool comes in. Luna price is now just below the last high(120$) with bad news coming. (Cap idk why XD)

Long rebalanced to short balanced
Short by deposits: Luna at 10/20% anc at 15/25% and ust at 45/65%
Long by borrowing ust 15/20% anc 15/25% luna 35/55%

Now luna price drops like a brick to 75$-65$
Now this swap pool can be used again to rebalanced long. See above.

This swapping i want to happen through a second pool on mars portocol itself. Pay like 1/2$ in fees per tx. (Maybe in mars token). And people from outside mars can make arbitrage with rebalancing the swap pool on mars protocol.

Maybe this pool can fit under the yield farm tab when it comes to providing LP token for pool.

This would be usefull for the first big future market in defi. Make ust the most usefull stable 1 pegged usd token.

Ohhh!!
Okay now i get it! So the actual rebalancing would be utilizing the liquidity on Mars protocol itself with Mars profiting from the thx fees and outside arbers.
That’s actually a really cool idéa and could be a great way to utilize “inactive” assets in the protol that are not being utilized at an optimal rate!

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