Redemption Capacity Function

Definitions

Variable
Definition
Ξ\LARGE\Xi
ETH
ξ\Large\xi
ETHtx, native weiWard token
P\Large P
Price of ETH gas ;
Ξgas\LARGE \frac{\Xi}{\text{gas}}
C\Large C
Collateral Ratio ;
Ξ on AMMξ off AMM\LARGE\frac{\Xi_{\text{ on AMM}}}{\xi_{\text{ off AMM}}}
γ\Large \gamma
ETHtx Scalar Quantity ; 21,000
gasξ\LARGE\frac{\text{gas}}{\xi}
ψ\LARGE\psi
DEX Shield ; 0.925 ; 7.5% redemption fee, consistent with transaction fees

Relations

One ETHtx (ξ) represents 21k gas (γ). ETHtx may be converted into ETH (Ξ) using the gas price (P):

Ξ=γξP\LARGE{\Xi = \gamma \xi P}

When redeeming ETHtx, a realized gas price can be calculated from the amount of ETH received (Ξout) after redeeming an amount of ETHtx (ξin):

Ξ inξ out=γP\LARGE\frac{\Xi_{\text{ in}}}{\xi_{\text{ out}}} = \gamma P

The collateral ratio (C) may be calculated by comparing the contract’s ETH supply (Ξ on AMM) to the contract’s ETHtx supply (ξ outstanding):

C=Ξ on AMMγξ oustandingPcurrent\LARGE C = \frac{\Xi_{\text{ on AMM}}}{\gamma \xi_{\text{ oustanding}}P_{\text{current}}}

Redemption Capacity Function

Ξ outξ in={ψγPcurrentC>1ψγPCC=1\LARGE \frac{\Xi_{\text{ out}}}{\xi_{\text{ in}}} = \begin{cases} \psi\gamma P_{\text{current}} & C > 1 \\ \psi\gamma P_{C} & C = 1 \end{cases}

Graphical Representation

Last modified 6mo ago