Margin Maintenance Is Critical To Counterparty Risk #8
Description
Right now the scores don't consider differences in margin maintenance between platforms. The higher the margin maintenance requirement, the safer it is for lenders to trust that borrowers won't default in the case of a sudden market movement. Compound's margin maintenance is the highest of all the platforms, with 150% margin maintenance for simply borrowing DAI against ETH, meanwhile Fulcrum and dYdX have a margin maintenance of 115% for the same asset. I believe Nuo's margin maintenance is even lower, and has been around 105-110% (I can't find documentation on Nuo's site about this now). I believe Nuo's low margin maintenance was a critical factor in the losses the platform caused lenders to sustain earlier in the year.
I believe this is a fairly critical metric to consider when assessing the risk to lenders, perhaps even moreso than the throughput of the liquidation mechanism itself.