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So what happens if we have a bull market? |
As the price of the underlying supplied collateral in the Necc protocol goes up,
- The protocol will be over collateralised overtime as the redemption rate + fees reduces the collateral ratio.
- People can use their minted NDOL as collateral within the system, increasing their leverage position size to risk on.
- The funding rates go up with increased demand meaning it costs fees to borrow more collateral from the system on open long and short positions.
- Plebs who dump their NECC get rekt and left behind.