PoolDelegateCover

Overview

PoolDelegateCover is responsible of holding custody of all first-loss capital posted by the Pool Delegate for a given Pool. First-loss capital exists to protect Liquidity Providers in the case of a Loan default. It is required to be posted by the Pool Delegate to ensure that they are directly financially incentivized to protect Liquidity Providers from losses.

First-Loss Mechanism

The Governor specifies the pre-requisite amount of first-loss capital that a Pool Delegate must provide in order to operate a Pool using setMinCoverAmount in MapleGlobals. This amount can be adjusted continuously over the Pool's operation.

If pool cover falls below the required amount, two consequences occur:

1. The Pool Delegate can no longer fund new Loans.

2. The Pool Delegate can no longer earn management fees.

The Governor also specifies minCoverLiquidationPercentage in MapleGlobals. This value defines what proportion of the Pool Delegate Cover goes towards reducing losses during a default. During a default scenario, cover is liquidated up to this proportion.

Examples

# Example 1

minCoverLiquidationPercentage: 20%

Cover posted   = 1000
Default amount = 500

Cover liquidated = min(1000 * 20%, 500)
                 = 200

# Example 2

minCoverLiquidationPercentage: 70%

Cover posted   = 1000
Default amount =  500

Cover liquidated = min(1000 * 70%, 500)
                 = 500