Isolation Mode (sandobx)

[robert-zaremba]

Summary

Allow risky assets to be utilized in lending in an Isolated Container.

Problem Definition

Today, to reduce market risk, Umee only allows to highly liquid assets in the lending framework. Aave has similar problem:

When Aave governance lists an asset on the Aave Protocol, borrowers using it as collateral immediately have access to the whole protocol’s liquidity. This makes it complicated to list new assets and reduces the capital efficiency for borrowers. Therefore, V3 introduces Isolation Mode, inspired by the MakerDAO approach for exposure management.

Proposal

Introduce a new type of assets: isolated:

• Only Isolated Assests can only be added as a collateral in an isolated mode.
• Only tokens that have been permitted by Umee governance to be borrowable in isolation mode can be borrowed by users utilizing an isolated collateral up to a specified debt ceiling.
• Add new parameter for each token: maximum collateral. Each Isolated Asset must have defined maximum collateral. Users can put in aggregate up to maximum collateral of any token (unless the parameter is not defined). This is to protect the system of giving too much exposure to a single token (ref: https://decrypt.co/103489/solend-whale-108m-loan-nearly-crashed-solana)

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