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RE: How BitShares protects MPAs using Margin Calls
The blockchain will only buy up to the maximum short squeeze price. If there are no orders left in that range, nothing else happens.
The blockchain will only buy up to the maximum short squeeze price. If there are no orders left in that range, nothing else happens.
if nothing else happens, than what happens to the Alice's position if blockchain can't buy anything?
As the value of the collateral continues to go down, the maximum short squeeze price moves through the market. If the market does not provide sufficient liquidity to settle the full debt, at some point the value of the collateral may drop below the nominal value of the debt. At that point, the system collapses. We call that a "black swan".