# Lower sSPELL Max Collateralization Ratio

###### tags: `Abracadabra` `MCR` `sSPELL`

# Infos

- MCR ( Max Collateralization Ratio ) : Also called LTV ( Loan To Value ) or Collateralization Ratio, refers to the max value that can be borrowed against a specific asset.
- Cauldron : part of the Abracadabra system where an user can deposit an interest bearing asset ( ibAsset ) as collateral, and borrow MIMs against it. Each cauldron is segregated from the others, and has it's own parameters, including MCR.
- The current MCR of the sSPELL cauldron is 80%
- Reference article about the XVS exploit : [Quill Hash Team article](https://quillhashteam.medium.com/200-m-venus-protocol-hack-analysis-b044af76a1ae)

# Motivations
This proposal came from various discoussions from the Abracadabra Discord chat, where many spell hodlers felt strongly against the high MCR of spell. As everyone can see, the ability of borrowing so much MIM had already made a negative impact on spell's pricing, which puts most spell hodlers at an disadvantage.

Having such high MCR can lead to a cascade of liquidations, hence lowering the price even more, and liquidate even more.

We do not want spell to become the next XVS, where 100m$ debt could not be recovered due people taking advantage of the 80% MCR.

# Relation to XVS exploit

The XVS exploit implied a price manipulation of the native token, however, the protocol didn't used segregated markets like Abracadabra does.

As the time of writting, there's a maximum of 20M of MIMs borrowable from the sSPELL cauldron, which represents around 1% of the total MIMs borrowed on the platform.

# The proposal

- Lower the MCR of the sSPELL cauldron to 60%.
- Mark the previous sSPELL cauldron as deprecated to incentivise people to move to the new one.