Illustrations
Last updated
Last updated
For purposes of simplicity we will refer to the tables in the file below to illustrate outcomes.
Possible resulting outcomes under our assumptions:
A defaulting MP beneficiary
In this scenario we assume that a successful MP beneficiary subsequently adopts serial defaulter status - the likelihood of this individual coming from the upper quarter of turn positions is high. Participants 1-4 are more than likely to fall into this category. The tables above serve as reference.
Assuming that Participant 1 (P1, P2, P3 and/or P4) collects the MP in cycle 1 and fails to pay their contributions till the end of the turn period and all else remains equal, These participants will get out what they initially committed as collateral security plus any YG on their staked balances. Although what they get back at the end of the term will be a combination of USDC, since they received the MP, and a reduced amount of ETH because the Collateral security in the form of ETH would have been liquidated to cover their monthly contribution obligations.
In this case:
Initial Collateral Position of Participant 1
Original Collateral Security ETH
*
=
ETH Collateral Value in USDC
0.75
*
$2000
=
1500
End of Term Position of Participant 1
Remaining Collateral ETH
*
+
MP in USDC
=
MP + Collateral USDC
0.3
*
$2000
+
900 USDC
=
1500 USDC
This category of beneficiary will avoid being expelled, they will receive all appropriate YG on their remaining ETH collateral as well as any remaining balance of their ETH collateral.
A defaulting MP beneficiary whose MP was frozen
Under these circumstances, considering the Takaturn 2.0 mathematics (RCC multiple eg, 1.1X RCC, 1.0x RCC and below 1x RCC) and according to our assumptions as well as the tables above, the greatest risk of a frozen MP falls into the middle segment of turn positions, participants 5 & more so 6.
In this case a defaulting beneficiary runs the risk of having their MP frozen when it's their turn. Let’s consider the table related to Participant 6 above. Using our RCC multiple logic where a consistent and reliable contribution behavior will ensure a RCC multiple of greater than 1.1x in the appropriate participants turn, Participant 6 (P6) is a serial defaulter and as a result of their status they will be eligible for the MP when it is their turn but will only receive the MP at the end of the turn group term, in addition, they will receive all YG on their still staked ETH collateral.
P6’s collateral position at the beginning of the term looks as follows:
Initial Collateral Position of Participant 6
Original Collateral Security ETH
*
ETH Price
=
ETH Collateral Value in USDC
0.50
*
$2000
=
1000
End of Term Position of Participant 6
Remaining Collateral ETH
*
ETH Price
+
MP in USDC
=
MP + Collateral USDC
0.05
*
$2000
+
900 USDC
=
1000 USDC
P6 will avoid expulsion but their MP will be frozen.
A defaulting participant who has not been MP beneficiary
Expulsion results when a participant has less than 1x of a Single Cycle Contribution (SCC) remaining as part of their ETH collateral balance.
The likelihood of this individual falling into the bottom quarter of turn positions is high. An expelled member who has not been a money pot beneficiary is entitled to their contributions back, made to previous turn cycle money pots. The previous money pot beneficiaries will pay their USDC contribution in the expelled’s turn (as though s/he would have been money pot beneficiary), the remaining beneficiaries are not required to contribute to this turn.
Referring to the tables above, the risk of expulsion begins at Participant 10 (P10) onwards (had our example been a 12 participant turn group). Everything being equal and our assumptions considered, if P10 is a serial defaulter, they could be expelled from the turn group before it is their turn to receive the MP, however, they would have ‘contributed to previous MP’s via liquidation of their ETH collateral.
Initial Collateral Position of Participant 10
Original Collateral Security ETH
*
ETH Price
=
ETH Collateral Value in USDC
0.30
*
$2000
=
600
End of Term Position of Participant 10
Remaining Collateral ETH at point of expulsion
*
ETH Price
+
MP in USDC
=
MP + Collateral USDC
0.0
*
$2000
+
=
600
The expelled participant is entitled to their MP at the end of the term, however their MP will be made up of contributions from the participants who received a contribution in their term from the expelled.
In our example P10 contributed to P1-P6 and was subsequently expelled due to their ETH collateral security running out from liquidation to pay contributions. Meaning that P10 is entitled to a reduced MP of $700 ($600 from P1-P6 plus $100 abatement as MP beneficiary). This MP will be a combination of USDC & ETH (depending on the payment behavior of other turn group participants).