🥈Dual Peg Enforcement
ArbiTen Finance has dual peg enforcement mechanisms working in parallel:
Seigniorage, as in Tomb Finance, and
Fractional collateralization, as in Frax and Iron Finance
With this dual peg enforcement mechanism, 10SHARE has two separate sets of functions. As part of the seigniorage system, the single 10SHARE pool emits ArbiTen tokens. As part of the fractional collateralization system, 10SHARE is required for ArbiTen minting and rewarded for redemption.
The dual sources of functionality should shore up the weaknesses of the component systems. Because the 10SHARE Boardroom pool emits ArbiTen, it will have an intrinsic source of value and should not drop to zero, as happened with Iron Finance's Titan token. In addition, the minting and redemption cycle should strengthen the Tomb system's ability to regain peg. We have set the 10SHARE TWAP period to 45 seconds, which should also cement 10SHARE's utility in redemption.
When ArbiTen is above peg:
The ArbiTen minting price rises, but not quite as much as the spot price
A minting discount below spot price should encourage minting, which could add ETH to the treasury at more than 0.1 ETH/ArbiTen
This increases the effective collateralization ratio
The protocol issues new ArbiTen to the 10SHARE pool
10BOND redemption bonuses are available above peg
When ArbiTen is below peg:
No new ArbiTen is produced as 10SHARE staking rewards
ArbiTen is removed from the circulating supply via 10BOND purchases
ArbiTen can be purchased from the market and redeemed for 0.1 ETH worth of ETH + 10SHARE token
ArbiTen Finance also has the DAO Treasury, which is envisioned partially as a price stabilization fund. However, buying up 10mb supply via the DAO treasury is meant as more of a backup plan. We hope that the powerful combination of the Seigniorage and Fractional Collateralization systems will enforce the peg.
Last updated