We should at least wait for leverage as this will increase stablecoin collateral,
Overall I think it will always be an issue when you offer no slippage redeem as an exit option - 5% fee just means the viability of using it is limited to whales with larger volume who can move kucoin price greater than 5%.
It is too early to have redeem for maha option, and a small % fee is only as good as the liquidity and market depth you have on maha pairs. There is not enough protections in place to encourage using maha as loan collateral while it can be redeemed against to game price feed differences and liquidity differences - people want to leverage long but don’t want to play musical chairs with their CR position.
20% fee is too high, it reminds me of mahaswap and trying to control price by introducing fees that no one is willing to pay - are we trying to resolve the arbitrage/collateral issue or minimize it? If you want to minimize it, use 5% fee. If you want to resolve it, a 20% or higher fee is so high that you might as well remove maha as redeem option.
There are other alternative strategies to explore too - such as;
1. enabling maha redeem, but instead of targeting the lowest CR position - it reduces proportionately across all open loans.
2. introduce a protection period where a loan against maha can not be redeemed against for 7-days, but can only be liquidated if under the CR.
3. simply route the redeem for maha through a dex - pancake and quickswap. This way there is no arbitrage, what is redeemed then does not effect loans.
e.g.
Redeeming Arth for Maha, does not burn arth and withdraw from loans - it simply swaps arth for maha on dex. This I think is best option as using the ‘redeem’ function for maha adds buying pressure instead of selling pressure by gaming the non-slippage.
If collateral for stables is too low, route it through the arth-stable pairs on exchange too. At least this way we are not syphoning TVL.
What we are saying here with a % fee instead, is that introducing this is an attempt to equalize the difference, but you have another factor of liquidity and different data inputs that can be exploited still. Add a % fee likely means the same problem continues only with more volatility, not less.
Suspend maha Redeem, route it through a dex swap instead with no burn or claim on loans. Problem solved.