Multi-collateral MDS & Supported collections

Midas initially launched with a single collection being eligible as collateral (Solana Monkey Business) in order to first gauge interest and upgrade features as required. In the next weeks, we plan to add more and more NFT collections from the Solana ecosystem and beyond.

Before introducing the collections accepted to mint MDS, it is important to understand the concept of Liquidation Ratio (which will be extensively used in this documentation).

In order to over-collaterize MDS and safeguard the peg, we’re currently using a liquidation ratio of 200%, which is the ratio between the value of the collateral and the amount of debt taken out of that collateral at which the NFT asset would be liquidated. The maximum values supported by midas are currently:

• a maximum of 35% of the value of the collateral can be taken out as debt

• if 35% is taken out on the collateral, a drop in value of the collateral of 30% (thus the value of the collateral becomes 70%) would trigger the liquidation of the asset

• Liquidation ratio = collateral-to-debt ratio triggering the liquidation = 70%/35% = 200%

This liquidation ratio is flat and arbitrarily set for the time being, which means that if someone decides to only take 17.5% of their collateral’s value as debt, their collateral would have to undergo a drop of 65% in price to trigger a liquidation (=35%/17.5% = 200%).

In this example, taking out 17.5% of a collateral’s value when price hasn’t moved yet (so the value of the collateral is still 100%) is equivalent to having a collateral-to-debt ratio of 571.43%.

This is what we mean when we emphasize the over-collaterization of our assets to protect the MDS soft peg to the dollar, with the highest risk possible being a collateral-to-debt ratio of 286% (35% debt taken out on 100% collateral value).

Example

User A owns an asset from collection XYZ worth $10,000. He wants to use MDS to be able to extract some value out of that asset. User A can take up to 35% of the value of his asset - $3,500 in total.

Let's say User A is relatively conservative, and wishes to take 20% of the value of his collateral in MDS, thus $2,000.

User A's collateral-to-debt ratio is $10,000-to-$2,000, thus equal to 500% (over-collaterized by 500%).

Midas' liquidation ratio for that collection XYZ is 200%, which means that User A's collateral-to-debt ratio would have to fall from 500% to 200% (=a decrease in the value of his collateral of 60%) to trigger the liquidation mechanism.

The liquidation ratio is always static (its value can be changed by governance), and represents the threshold at which the liquidation happens.

The collateral-to-debt ratio is the health of the current position taken. The less risk is taken at the moment of contracting the debt, the higher this ratio will be at the start.

Accepted collections

Midas currently accepts the following NFT collections with a Liquidation Ratio of 200% (detail below):

• Solana Monkey Business

• Degen Apes Academy

• MadLads

• Claynosaurz

• ABC

• Smyths

• Famous Fox Federation

• Galactic Geckos Space Garage

• Okay Bears

• DegenFatCats