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)