Fractional Collateralization
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)
Last modified 11mo ago