Both of these mechanisms will protect the price stability of aUSD, but we need to find a suitable DEX or
create one ourselves.🧐
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When the price of aUSD is 1.2, Agility can incentivize LPs to provide more liquidity in the 1-1.2 range by offering more esAGI, helping the price of aUSD return to 1.
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For example,
when the price of aUSD is 0.98, Agility can incentivize LPs to provide more liquidity in the 0.98-1 range by offering more esAGI, helping the price of aUSD return to 1.
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🦕
Additional incentives for LP in recovery price ranges
We can incentivize aUSD liquidity in recovery price ranges.
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I believe this will not cause any discomfort to traders because aUSD is an over-collateralization stablecoin. Traders will not incur any losses if they make the right decisions.
This also protects the interests of LPs and avoids their losses.
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For example,
when the price of aUSD is <1, traders will pay a higher fee if they continue to sell aUSD.
When the price of aUSD is >1, traders will pay a higher fee if they continue to buy aUSD.
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🦖
Price-Adjusted Swap Fee
When aUSD depeg, traders need to pay a higher swap fee if they swap in the opposite direction.
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But how?
The answer is
- Price-Adjusted Swap Fee
- Additional incentives for LP in recovery price ranges
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However, if a large number of LPs add liquidity when aUSD is at 0.98 and more traders continue to sell aUSD, it will be more difficult for the price recovery.
Therefore, we need to improve the stable swap mechanism of the DEX to incentivize the correct behavior of LPs and trader
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Firstly, let's consider a scenario where aUSD depeg
When the price of aUSD=1, how can we bring it back to 1?
Common practice is to:
Encourage debtors to buy aUSD and repay their debts, resulting in debt relief.
Encourage traders to buy low and sell high, to get a profit.
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Rethinking the price stability mechanism of aUSD, I have found some areas for improvement.
Introducing new mechanism
Price-Adjusted Swap Fee & Additional LP incentives in recovery price ranges
Nook|STEALTH COOKING retweeted
We have noticed that there are multipe projects announcing partnership with us: Most of them are going to launch their public sale soon.
Please DYOR before ape into the token sales. We have never get in touched with those proejcts. We only disclosed following partnership.
Maturity-Boosted Liquidity Mechanism (MBLM)
"mercenary capital" is a fundamental problem in DeFi World that Agility will solve. Truly aligning all participants on the long-term health and sustainability of Agility, not just in the current moment but at all times in the future.
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