Fractional Collateralization
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In fractional collateralization:
  • The 10mb supply is fractionally collateralized by a USDC redemption treasury
  • Minting and redemption are set up to increase the effective collateralization ratio
Minting
  • 10mb can be minted by paying 10SHARE + USDC
  • Minting payment token ratio determined by the target collateral ratio, TCR
    • Example: TCR = 80%; TWAP = 1.0 peg; payment = 0.08 USDC + 0.02 USDC worth of 10SHARE + fee
  • TCR automatically updated according to 10mb TWAP
  • Minting price = 0.1 USDC + fee if 10mb is below peg
  • Minting price = 0.1 USDC + F*(TWAP - 0.1 USDC) + fee
    • F = 98% if 10mb is above peg
    • F = 0 if 10mb is below peg
  • Fee = 0.4%
Redemption
  • 10mb can be redeemed for 10SHARE + USDC
  • Redemption value = always 0.1 USDC - fee
  • Redemption token ratio determined by the effective collateral ratio (ECR, the amount of USDC in the redemption treasury / the amount of 10mb in existence)
    • Example: ECR = 50%; payment = 0.05 USDC + 0.05 USDC worth of 10SHARE - fee
  • The 10SHARE given in redemptions is new 10SHARE minted by the protocol
  • Redemption does not directly affect the ECR
  • Redemption is done in 2 steps to prevent flash loan exploits
  • Fee = 0.4%
  • 10SHARE TWAP period = 45 seconds (was 10 minutes in Iron Finance)
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