/biz/ - Business & Finance

People always gloss over the fact that in order for that collateral to mean anything the LINK has to be liquid in the first place. If I am one of these clients supposedly wanting to execute multimillion dollar derivatives contracts through the LINK system and you tell me that the collateral against my contract (which by design is immutable, self-executing) is a cryptocurrency, I'd have obvious concerns.

I'd prefer the collateral to be a non-volatile asset closely related to the relevant currency or asset of the contract. If a multimillion dollar derivatives contract is compromised, at least in theory, I will need to sell the LINK. Who will be buying these multimillion dollar quantities of LINK at a full-adoption prices? Can I access and liquidate that collateral in a timely manner as a company that may need that collateral immediately because my contract didn't execute properly? What does that mean for LINK's price?

You can't just answer this as "the client can just require staking at 20% above contract value" because that doesn't remove these issues and price crashes as a result of immediate liquidation of these huge contracts LINK will supposedly serve is one one of the potential issues. At least, this all means LINK has to grow gradually in terms of "market cap" so such liquidity actually exists, i.e. not really a singularity of price because there would be no liquidity. At worst, it means the project's mechanism isn't as marketable as you lot say it is.

>>20711718
People always gloss over the fact that in order for that collateral to mean anything the LINK has to be liquid in the first place. If so many tokens are "locked up" for staking, how are you expecting a company whose supposed multimillion dollar derivatives contract is compromised, at least in theory, and the LINK collateral is to be paid out to be able to liquidate all that collateral in the contract denominated currency or commodity (e.g. USD) in a timely manner? Who buys that multimillion dollar quantity of LINK at a full-adoption prices? Does it happen all at once for a company that may need it to because their contract didn't execute properly? What does that mean for LINK's price? You can't just answer this as "the client can just require staking at 20% above contract value" because that doesn't remove these issues.