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Boosted Borrow
Boosted Borrows are the first step in MOAR's capital efficiency initiative, tackling the problem of over-collateralization.
With Boosted Borrow, you can increase your collateral's borrow factor to 100% for a period of time. By pairing a deposited collateral with a Put, MOAR's lending platform locks in an exit price should a liquidation be triggered. This certainty in exit price allows MOAR to increase collateral factors to 100%.

Boosted Collateral

Boosts apply to certain collateral assets only. You must have these assets deposited into MOAR in order to activate Boosted Borrow options.
Boosted Borrows are enabled with the use of MOAR's Boosters.

Maximum Protection Composition (MPC)

Maximum Protection Composition (MPC) is an asset-specific risk metric that caps the percentage of booted collateral for the account based on $ equivalent. In addition to market risks, there are small but non-zero execution risks, such as the derivatives pool not being solvent or active at time of exercise or inability to for the derivatives pool to exercise in a timely fashion.
These execution risks hold true for any multi-legged trade in TradFi or DeFi, and are not specific to MOAR. Using MPC, MOAR can better protect platform solvency.
MPC is calculated with a simple formula:
For example, if the MPC of ETH is set to 75% and Alice has 10 ETH at $1,000 current value, then up to $7,500 of ETH can be optimized. $ Amount is used instead of Number of Tokens to account for the different strike prices that were locked in for different boosters.

Examples

We provide basic examples to showcase how Boosted Borrows outperform Non-Boosted Borrows in every case. We show:
    1.
    Boosted Borrows provide more $ borrow power for the same collateral than Non-Boosted Borrows.
    2.
    Boosted Borrows capture as much upside $ borrow power as Non-Boosted Borrows.
    3.
    Boosted Borrows do not lose their locked $ borrow power even when collateral price drops.

Example 1: Boosted Borrow

Given account:
    1.
    account MPC is 100%
    2.
    account has one un-boosted ETH deposited
    3.
    ETH price is at $3,000
How much $ borrowing power would a borrower unlock if the borrower has 1 ETH in deposit which is not yet borrowed or Boosted, and how would a Boosted Borrow compare to a Non-Boosted Borrow?
The formula for $ borrow power is:
$ Borrow Power = (non_Boosted, non-Borrowed Collateral) * MPC * Spot Price
For simplicity, assume the MPC is set at 100%. That is, all the ETH that is in the borrower's deposit can be Boosted.
$ Borrow Power = 1 * 100% $3,000 = $3,000
By buying 1 Booster paired with the account's 1 ETH, the account can borrow $3,000 against his/her ETH.
If this borrower had not boosted, assuming 75% typical collateral factor for ETH, he/she would have been able to borrow $3,000 * 75% = $2,250 worth of assets against this 1 ETH.
Borrow
Borrow Value
Boosted
$3,000
Non-Boosted
$2,250

Example 2: Collateral Price Increases on Boosted Borrow

What happens if ETH price increases to $4,000 if user Boosted Borrow as in Example 1 and how would this have fared against a non-Boosted Borrow?
$ Borrow Power = Locked Boosted Borrow + Collateral Value Increase * Collateral Factor
$ Borrow Power = $3,000 + 1 ETH *( $4,000 - $3,000) * 75%= $3,750
A non-boosted Borrow, assuming 75% collateral factor for ETH, would have borrowing power of $4,000 *75% = $3,000. Not surprisingly, because the increase in price is not boosted, both positions increased by the same amount. However, the Boosted Borrow still allow for more borrow due to its higher starting amount.
Borrow
Borrow Value
Increase in Borrow Value
Boosted
$3,750
$750
Non-Boosted
$3,000
$750
A Boosted Borrow's position captures as much borrow power as an Non-Boosted Borrow when the collateral price increases.

Example 3: Collateral Price Decreases on Boosted Borrow

What happens if ETH price decreases to $2,000 if user Boosted Borrow as in Example 1 and how would this have fared against a Non-Boosted Borrow. Assume the user borrowed $3,000 in USDC, the maximum amount of a Non-Boosted Borrow. Also assume the liquidation ratio is 80%. That is, should $ Value of borrowed collateral drop below 80% of the borrowed amount, the position is liquidated.
For the Boosted Borrow, the borrow power will always be $3,000, while the Boost is active. This is because the lending platform can always liquidate the 1 ETH for market price + the 1 Booster for the difference of $3,000 and market price.
For the Non-Boosted Borrow, the borrow power will decrease with market price. At $2,000, the borrow power of Non-Boosted Borrow will be $2,000 * 75% = $1,500. This is 50% less than the Boosted Borrow.
Even if ETH price decreased to $100, the Boosted Borrow would retain its borrowing power of $3,000.
Borrow
Borrow Value
Decrease in Borrow Value
Boosted
$3,000
$0
Non-Boosted
$1,500
-$750
A Boosted Borrow's locked $ borrow power does not decrease even when the collateral price decreases whereas a Non-Boosted Borrow decreases linearly with price.
Last modified 4mo ago