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Alex McFarlane
@flipdazed
Founder of @KeyringNetwork Interests: quant, theoretical physics, snowboarding, skateboarding, surfing
Joined November 2014
472 Following    1.3K Followers
Leverage is what blows up DeFi. Everytime. Incentives for lending markets are messed up: markets take a performance fee on borrowing so more leverage means more profit (until it blows up!) What if all the top financial institutions and their quants sat down and figured out how to calculate margins for clearing purposes? Turns out they did. Many times. They even created a DAO called @ISDA. And the methodology works for DeFi. We have adopted @ISDA's SIMM standard in combination with Basel III's FRTB liquidity horizons to underpin our risk methodology at @KeyringNetwork for margining (setting LTV) in decentralised lending and borrowing. In our markets there is almost no discretion. No negotiation for favourable terms. No flow-driven parameters. No re-inventing the wheel. Verify. Don't Trust. Full methodology of D-SIMM coming very shortly ... a teaser snippet below.
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