ForTube & QUSD Collateralisation Rate

Hello,
We are the team from StableXSwap, a stablecoin-focused AMM swap on Binance Smart Chain, which offers QUSD stablecoin pairs with BUSD, USDC, USDT, and DAI.

Since Qian Protocol is an important “sister project” of the ForTube defi lending protocol, we think it’s important that ForTube’s lending protocol makes sure to give QUSD the maximum possible use cases to attract more users over from the greater Defi Community.

Currently QUSD has a max LTV ratio of 90% on ForTube, which means that for every QUSD you deposit, you can only borrow out 90 cents of another coin.

In the early bootstrapping phases of the QUSD growth, we think it is imperative that QUSD is given every advantage to convince other users to use it rather than one of the established stablecoins.

Consequently, we are proposing to give QUSD a LTV ratio of 95%.

The reasons set forth for this proposal are that:

  1. With the introduction of more stablecoin exchanges on BSC, such as our own (trade.stablexswap.com), the decentralised ecosystem to liquidate QUSD is now more liquid, allowing for reduced risk to the greater collateral pool as a whole. Thus a higher LTV can be afforded.
  2. Further, the higher LTV acts as a “floor” for the QUSD price, as if the open market price of QUSD were to ever be below 95 cents, it would be advantageous for users to buy this QUSD from any exchange and deposit it into ForTube to borrow 95 cents worth of stablecoins out. If QUSD further drops the user at least gets 95 cents, and if it comes back up, they make money on QUSD returning to its rightful peg. THis mechanism is very similar (or opposite) of the original Pickle Finance mechanism to encourage users to sell DAI back down to a dollar. It is important for the stability of any stablecoin, to be able to coordinate action from the community, incentivised or otherwise, to help maintain QUSD’s peg.

In this matter, by doing so, ForTube would increase its stablecoin deposits of QUSD, helping keep in check the supply of QUSD circulating on exchanges, and at the same time, will also increase the borrowing demand for other stablecoins like BUSD USDT. In equilibrium, this will in turn increase the lending rates for BUSD and USDT, which will entice more users to come and deposit funds on ForTube. We believe this can be a win-win for both the ForTube, Qian Finance, and great BSC community.

We look forward to hear your feedback and suggestions on this proposal.

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