Decentralized finance service B.Protocol has announced plans for a new version that will improve the liquidation of undercollateralized loan positions on lending platforms.
In a release issued on Tuesday, the backstop liquidity protocol for DeFi lending platforms revealed that the upcoming v2 is based on a white paper for a novel Backstop automated market maker (B.AMM) written by a couple of anonymous community members. According to a blog post published by B.Protocol founder Yaron Velner the v1 design that utilized professional liquidators to share profits with users instead of miners was not sufficient to tackle the capital inefficiency problem. Unlike centralized exchanges like Binance that offer leveraged trading up to 100 times user deposits, the leverage ratio on decentralized exchanges (DEX) rarely exceeds five times. This significantly lower leverage limit is despite the massive liquidity pool available to DEX platforms.
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