We need to change several things to stay relevant as the competition is evolving faster.
Thesis:
Only if the borrow / lend market is healthy, the trading market can be healthy - as trading needs liquidty.
We don’t want to cheat liquidity with farming incentives, which will have no effect in the end, but want to get it in a sustainable way.
Status now 07-10-2021 we have on mainnet (USDC 2,417,105.90, USDT 866,826.45, DAI 1,615,054.78 and ETH 323.80) and Polygon (USDC 890,096.84, USDT 21,377.66, ETH 121.59) available.
This is not suitable for serious trading activity - and mainnet is not suitable for small volume.
I want to say, to be relevant and successful as a margin trading platform, we are required to be able to offer the traders a large pool of liquidity. There is no way around this.
But large borrowing and trading activity is also in the interest of token holders, as it generates revenue.
I identified several reasons for our bad performance we can work on:
1) The deadend of lending money to fulcrum or the lack of "composeability"
Lender earns earns typically a little higher interest than you would earn on our competitions platforms (Status now 07-10-2021 we have on mainnet for USDC - fulcrum: 6.42% , aave: 7.03%, comp: 5.65%). Okay, this was nice in a world pre-yield farming - we cannot keep it like this in 2021.
2) Account based credit and debt system - not position based
We should create an account system like aave or compound have for the collateral, you can put whatever coin you have into the pool to earn interest while you wait for your trade. When the time has come, take out your loan. The collateral could be composed of different assets and which will interest while you are paying for your trade.
In case of not enough liquidity after closing the trade to pay out your collateral, the account based system you will allow to credit your position and you have the position with high interest as compensation for not enough liquidity. No need to keep dead “vault locked” capital.
Imagine this situation:
A trader shorts ETH and has USDC as collateral. He will pay now 6% interest for his short and his USDC are just doing nothing. If he could earn interest for the collateral he would earn more than he is spending, because it is overcapitalized. This is how it should be, this is how it is fair.
3) Borrower-Side
For borrowers fulcrum is a bad option, because they don’t earn interest on the collateral and have to pay loan origination fee which doesn’t exists elsewhere.
As most loan are rather short term, this hurts!!
Quick solution:
Remove loan origination fees to make it a little more attractive to borrow / trade - most of the revenue comes from interest payments anyway.
Longterm goal
Manage to have (thx to margin trading activity) interest rates above market.
Longterm solution:
Make fulcrum moneymarket composable! Let collateral work in the system and earn interest for the trader! And remove the deadend of the deposits and loans with an account based model.
