SCDP
Shared Collateralized Debt Position
Last updated
Shared Collateralized Debt Position
Last updated
The shared collateralized debt position (SCDP) allows different accounts to deposit into a single position. These pooled are utilized as liquidity for zero-slippage where can be exchanged to an equal value of another Kresko Asset.
For example, Kresko Assets borrowed from an can be swapped to another Kresko Asset, translating to a short position on the borrowed asset. Conversely, using or to obtain Kresko Assets for a swap allows any Kresko Asset to be acquired without borrowing.
The shared position concentrates the liquidity of Kresko Assets while liquidity providers and traders avoid the downsides of a regular AMM, such as slippage, impermanent loss and fragmented liquidity.
Accounts can participate in the SCDP as a depositor, trader and/or a .
Most notable risk to the SCDP is depositors being unable to fully manage their risk, leaving them to rely on the protocols risk mitigation parameters. Since depositors are the counterparty for each swap, they bear the risk of adverse selection and rapid changes to the which might lead into liquidations. Because of this, the protocol is committed to align the incentives as such.
To mitigate risk of the depositors, the used for the SCDP has a large difference to the . As collateral is utilized by arbitrary trading and can any non-utilized collateral, it shouldn’t be a concern to hit the MCR.
