Fractional Collateralization

Search…
​
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)
Seigniorage
Next - Protocol
DAO Treasury
Last modified 3mo ago
Copy link