Simulation
To make sure the liquidation process can be made smoothly on Furion, which plays a very important role in efficient borrowing & lending, minimizing the risk of bad debts, and serving leveraged trading, we simulate and stress-test liquidation scenarios by modeling all kinds of market movements, to see if the liquidators are sufficiently incentivized.
We also compare the AMM-style fragmented lending(Furion) with peer-to-peer lending mechanisms(like BendDAO) and find that, to the extent that liquidity depth allows, the former has a higher incentive effect on liquidators while improving liquidation efficiency, thus making it more conducive to build an organic market.
Preparation(Setup)
- 1.The price of simulated NFT follows Geometric Brown Motion, with drift and volatility as hyperparameters.
- 2.There are 4 transactions per day on average following the Poisson Process.
- 3.The depth for the AMM pool(k^2) is fixed at 500,000. No liquidity goes in and out during the simulation.
- 4.The price for the AMM pool aligns perfectly with the NFT market.
Simulation Result
Conclusion
Liquidation on Furion is carried out in a more timely manner, saving time and reducing volatility costs.
Last modified 1mo ago