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RE: How BitShares protects MPAs using Margin Calls
what if there are not enough offers/orders on the market or they are out of the short squeeze range?
what if there are not enough offers/orders on the market or they are out of the short squeeze range?
I was wondering this myself, particularly whether there is a time limit for a margin call to be executed. From my observations of the market over the past weeks, there doesn't seem to be. It would be the margin call remains until: 1) it is filled; 2) the feed price moves back above the call price; or 3) the feed price moves further such that the collateral is no longer sufficient and the position is forced settled on the MPA holder.
Precisely.
The blockchain will only buy up to the maximum short squeeze price. If there are no orders left in that range, nothing else happens.
if nothing else happens, than what happens to the Alice's position if blockchain can't buy anything?
As the value of the collateral continues to go down, the maximum short squeeze price moves through the market. If the market does not provide sufficient liquidity to settle the full debt, at some point the value of the collateral may drop below the nominal value of the debt. At that point, the system collapses. We call that a "black swan".