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Limitations
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Here we address key assumptions involved in building Collar
Users must be comfortable temporarily limiting upside in order to protect downside
- This can be mitigated with rolls (we're developing a feature called auto-roll that leverage Keepers to request rolls automatically!)
Savvy marketmakers to participate in the protocol actively
- Where there is money to be made, marketmakers tend to participate. We are partnered with two already for our private Beta
Lack of AMM liquidity
- This is rarely an issue, after all, if there's no spot market, why even try to create products that are more complex.
Potential barriers to understanding and entry
- Collar is a lot for the average user to understand, which is why we're committed to transparency and simplicity.
Declined pricing for rolls in highly volatile times
- Marketmakers may not always provide roll pricing, which is a risk.
Lack of desire for marketmakers to quote the most volatile of tail assets
- Marketmakers may not be willing to quote the latest dog, frog, or memecoin
Market impact upon sale of assets into DEX
- It's arguably better to have the market absorb this sale in good times rather than bad, however market impact is largely unavoidable, as it's inherently bearish to borrow against an asset.