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Risk management of the MDS platform

The veinHades token allows holders to vote to perform the following risk management actions on the midas protocol:
  • Whitelist new NFT collections: Create a new whitelist entry for a specific NFT collection with its unique set of risk parameters (liquidation ratio, collateral-to-debt ceiling, ..). The NFT collection can either be a new one that wasn’t on the midas platform before or it can be an additional entry for an NFT collection already whitelisted, but with a new set of risk parameters.
  • Modify existing whitelisted entries: Change the risk parameters of one or more existing whitelisted entries that were already added to the midas platform.
The range of actions available to veinHades token holders will grow as the platform offers more options.

Risk parameters

The collaterized debt positions have multiple risk parameters that enforce how they can be used. Each CDP type has its own unique set of risk parameters, and these parameters are determined based on the risk profile of the collateral used by the CDP type. These parameters are directly controlled by veinHades holders through voting, with one veinHades giving its holder one vote. The current risk parameters have been arbitrarily determined by the midas platform developers to ensure a healthy start of the protocol.
The key risk parameters are:
  • Debt ceiling: the maximum amount of debt that can be created using a single type of CDP. Once enough debt has been created by a CDP of any given type, it becomes impossible to create more unless existing CDPs are closed. The debt ceiling is used to ensure sufficient diversification of the collateral portfolio.
  • Maximum debt position on a unique CDP: currently set at 35% across the platform, it is the maximum amount of MDS obtainable on any asset. This parameter can be adjusted on a per-CDP basis.
  • Upfront fee: for each creation of a vault, a single fee, equivalent to 1% of the total amount of MDS minted, is taken.
  • Penalty fee: in the event of a liquidation, the asset is liquidated through our Liquidations of risky assets & Collateral Cashback and a penalty fee of 10% is taken on the amount obtained through liquidation, minus repaid debt.