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Update sip-390.md
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kaleb-keny committed Jun 5, 2024
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Expand Up @@ -21,11 +21,11 @@ This sip proposes to incorporate into the minimum credit calculation the amount
<!--A short (~200 word) description of the proposed change, the abstract should clearly describe the proposed change. This is what *will* be done if the SIP is implemented, not *why* it should be done or *how* it will be done. If the SIP proposes deploying a new contract, write, "we propose to deploy a new contract that will do x".-->

Some concepts covering this SIP:
- Minimum credit represents the minimum amount of collateral that needs to cover a market that allows traders to withdraw their deposited margin, taking into account profits and losses incurred by traders.
- Credit Capacity represents the value of the collateral delegated into a market by LP's.

Currently, minimum credit is calculated by iterating on over active markets, getting the active open interest and multiplying that by a `lockedOiRatio`, this gives insight information on the expected credit that needs to be catered for by LP's. While credit capacity is calculated by incorporating user deposited margin as well as traders. Hence, this [PR](https://github.com/Synthetixio/synthetix-v3/pull/2144) fixes the calculation of minimum credit by requiring that traders' margin are covered by LP's.
- Credit Capacity represents the total amount of USD that the market could withdraw if it were to immediately unwrap all its positions.
- locked credit represents the minimum amount of delegated collateral that needs to be available to allows traders to withdraw their deposited margin and profits.

The validation done in the [core of the system](https://github.com/Synthetixio/synthetix-v3/blob/cace699d1fb070042ca09a390c95548c31a5d025/protocol/synthetix/contracts/storage/Market.sol#L277) uses these concepts whereby `creditCapacityD18` is calculated by summing up the value of the delegated collateral of LP's **but also includes traders margin**. However, `lockedCredit` does not include the latter margin, resulting in the validation not covering the edge case where LP's are able to withdraw collateral that restricts traders from withdrawing their margin.
Currently, minimum credit is calculated by iterating on over active markets, getting the active open interest and multiplying that by a `lockedOiRatio`, this gives insight information on the expected credit that needs to be catered for by LP's.

## Motivation

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