MCR is now paused at 162,425 ETH. You can read more about the thought process behind the decision here, but I wanted to talk about the implications moving forward.

MCR will be paused there until one of the following happens:

1. A governance decision, similar to this one, is passed to programmatically grow it again because capacity is being tapped on many individual contracts.

2. Total cover exceeds 780k, which causes the gearing factor (4.8) based approach to dictate the MCR calc since it would now produce the larger of the two values.

We’ll focus on the second of the two causes. Expiring covers have no direct effect on MCR, so price will be unaffected. The indirect effect is based on the fact that cover needs to exceed 780k ETH for MCR to increase. This means when cover expires, there needs to be that much more cover purchased in order for the gearing factor approach to drive MCR. There’s currently 569k ETH ($215m) in outstanding cover, with 369k ETH ($160m) set to expire overnight (from 10/13 to 10/14). If you zoom out a week, the lingering expirations will result in an active cover total of 140k ETH ($53m).

The interesting way to think about this is that the amount of cover that needs to be purchased before MCR becomes cover driven will actually drive substantial capital to the pool. Starting from tomorrow (since total cover will be much more normalized) and using the next 30 days as the window, there needs to be 691k ETH ($265m) w

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