Fractional Collateralization

In fractional collateralization:
  • The ArbiTen supply is fractionally collateralized by an ETH redemption treasury
  • Minting and redemption are set up to increase the effective collateralization ratio
Minting
  • ArbiTen can be minted by paying 10SHARE + ETH
  • Total mintable ArbiTen scales up by epoch (New in ArbiTen Finance)
  • Minting payment token ratio determined by the target collateral ratio, TCR
    • Example: TCR = 80%; TWAP = 1.0 peg; payment = 0.08 ETH + 0.02 ArbiTen worth of 10SHARE + fee
  • TCR automatically updated according to ArbiTen TWAP
  • Minting price = 0.1 ETH + fee if ArbiTen is below peg
  • Minting price = 0.1 ETH + F*(TWAP - 0.1 ETH) + fee
    • F = 98% if ArbiTen is above peg
    • F = 0 if ArbiTen is below peg
  • Fee = 0.4%
Redemption
  • ArbiTen can be redeemed for 10SHARE + ETH
  • Total redeemable ArbiTen starts on a 7-day delay and scales up by epoch (New in ArbiTen Finance)
  • Total Redemption Value = always 0.1 ETH - fee
  • Redemption token ratio determined by the effective collateral ratio (ECR, the amount of ETH in the redemption treasury / the amount of ArbiTen in existence)
    • Example: ECR = 50%; payment = 0.05 ETH + 0.05 ETH 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)