The proposal is to give users the opportunity to protect their loan accounts in the event of the NFT values dropping below the liquidation limit by submitting additional collateral to balance the LTV (loan to value)
Current state of liquidation
Borrower purchases NFT with LTV of 75%
NFT value drops bringing the LTV to 60%
TribeOne protocol would proceed to liquidate the NFT to offset further drops in value.
Proposed state of liquidation
Borrower purchases NFT with LTV of 75%
NFT value drops bringing the LTV to 60%
Borrower provides additional NFT as collateral to balance the LTV back to its original 75% LTV.
This protects the borrowers original NFT without needing to lose on potential gains.
Sample of Proposal
NFT valued at 10 ETH
TribeOne loan taken at 75% for 7.5ETH
Users contributes 2.5 ETH
Value of NFT is now 7 ETH
Loan to value is now 107%
User provides collateral in the form of NFT valued at 3 ETH to drop the LTV back to its original 75% ratio.
This method allows the user to protect his original 2.5 ETH contributed towards the purchase of the NFT with TribeOne