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100 sats \ 10 replies \ @roach 3 Nov 2022 \ parent \ on: Fuji Money AMA bitcoin
How does Fuji make money if there is no interest? Why would a user want to stake if they can't earn interest?
When you borrow you pay a setup contract fee which eventually can be added on closing as well.
Also, when liquidations happen the difference between the amount of confiscated collateral and burned Fuji asset is another revenue stream.
Users can only borrow: their collateral can always be taken back and the redemption is non-interactive (ie no cooperation with Fuji is needed)
To earn interest you can eventually lend the borrowed Fuji to another party or swap for USDt and lend on HodlHodl
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Also, when liquidations happen the difference between the amount of confiscated collateral and burned Fuji asset is another revenue stream.
Let's get real with this for a minute: I think you are saying that Fuji makes the ENTIRE REMAINDER when you liquidate a borrower.
In your example, you make approximately $50 on Alice's $200 loan.
If I'm reading this right, and I think I am, your business and revenue models are so flawed as to bring your entire judgment set into question.
As in: nobody in their right mind would ever use such a usurious service.
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You can always redeem your collateral or topup before liquidation.
Liquidation can theoretically never happen in the contract lifecycle.
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That being said the liquidation is very important because rebalance the system. To perform timely liquidations Fuji must have capital allocated for each contract.
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Sorry to be such a downer on all your hard work to this point, but if you are absolutely clear with potential borrowers about this complete loss of bitcoin on liquidation, your chances of success with this product are essentially zero.
It's an enormous penalty, Outrageous, even. Again, brings into question all of your thinking on this project for you to think this would work in the real world.
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We already communicated that the minimum collateralization ratio will decrease over time as low as 110%.
We value your feedback, ideally we can have an alternative contractor version with compound interest and decrease the amount of confiscated collateral
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then why not launch at 110%? I can go to Amber right now at 110% on unlimited BTC. And get a decent remainder if I get liquidated.
Take a hard look at what you're doing and ask yourself exactly why you are setting up an enterprise with a maximum adversarial relationship with potential customers.
It's because you want a risk-free shot at 25% of your customer's bitcoin.
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The tradeoff is zero interest. I wouldn't be surprised to see some decent traction.
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Interest on these types of tenors is negligible. The whole business model is liquidation fees, and these are unconscionable. Sorry to be so harsh but we really don't need this sort of scammy thing infiltrating Lightning so early on.
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Sorry, naive. And I say this as somebody who has been liquidated. In a volatile market, you can go from completely safe to liquidated in just a few minutes.
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