Collateralization

Collateralized DAO portfolio assets may provide a pathway for temporary funding for $QD holders using platforms like MakerDAO or AAVE. By creating a highly over-collateralized CDP to generate stablecoins such as DAI, these borrowed funds could then be used to offer loans to $QD holders.

Risk would be amplified and would require an astute understanding of market dynamics on behalf of the participant.

As a general rule, underlying asset collateralization ratios must always be above 250%, and user ratios must remain above 250%, or face liquidation. However, the actual values chosen will be decided by the DAO prior to deployment (e.g. both asset ratios lowered to 200%).

If the underlying asset ratio drops below 250%, users with the lowest ratios will be liquidated, in order, to satisfy the position of the underlying asset, even if the users' ratio would otherwise be deemed satisfactory.

The DAO may decide to close collateralized positions while leveraged $QD positions remain open at any time. This action would then allow borrowers at a later date redeem their $QD less their borrow amount.