Hybrid Reserve πŸ₯š
Most of decentralized synthetic assets require on-chain overcollateralization at the required level, according the data from DeBank (https://debank.com/ranking/lending), the mass liquidation of lending and borrowing on Ethereum and other chains happen regularly, the highest was on May 19th 2021 ($5.7 billions), hence, being the maker on crypto space are difficult to estimate how much they need to deposit collateral assets in the smart contract over-time even for experienced maker.
The hybrid reserve mechanism proposed by Tamago Finance makes the synthetic token generated from the protocol can be backed by stablecoin and non-stablecoin at the same time and allows the minter to safely maintain the collateral position throughout uncertain market periods of rising or falling token prices of the non-stablecoin collateral.
Each token value backed by USDC and TAMG
The design is consistent with the bull and bear market cycles in the crypto market, aim to overcome the biggest risk with the lending platforms which is the volatility that can lead to liquidations and it's common to see the maker maintains the collateralization ratio at about 300% while the liquidation ratio is something around 120%-150%.
Better manage the position, better leverage you can acquire
Collateralizing By
Bull Market
Bear Market
Non-stablecoin
Mint more synthetics
Prone to be liquidated
Stablecoin
No long exposure
Low volatility
Hybrid Reserve
Mint more synthetics*
Low volatility*
*
Non-stablecoin > Stablecoin
Non-stablecoin > Native
We would rather allow minters to manage the collateral position depends on the risk they want to take, however, ordinary minter can easily minimize the volatility by increase portion of stablecoin during the bear market and opposite during the bull market.
At this early stage, we are only supported a few token for being collateral. USDC, WMATIC, TAMG are among the initial list.
Stablecoin
Non-Stablecoin
USDC
WMATIC
USDT (Planned)
TAMG (Planned)
DAI (Planned)
WBTC (Planned)

Minting

We adopt the method of over-collateralization to get a loan of synthetic assets, the minter need to placing assets as collateral where the value must be exceed the value of the loan, the total output can be described by following equation:
Z=(Xβˆ—Px)+(Yβˆ—Py)/(Pzβˆ—Cr),Cr>LrZ = (X*Px)+(Y*Py) / (Pz*Cr) , Cr > Lr
Cr = the collateral ratio, Lr = the liquidation ratio
Z = total synthetics to be minted, Pz = the price of reference asset in USD
X = total non-stablecoin collateral, Px = the price of non-stablecoin token in USD
Y = total stablecoin collateral, Py = the price of stablecoin token in USD

Market Indicator

it is recommended to use more portion of stablecoin during the bear market and the opposite on the bull market to keep volatility under control, the smart contract has a helper function to indicates whether the market is on rise or fall and proper calculate each portion for the minter conveniently.
Using this formula:
C=Px/(A+B)C = Px / (A+B)
C = constant to determine the market condition, >0.5 = bull, <0.5 = bear
Px = latest price of non-stablecoin colleteral
A = 30 day average price of non-stablecoin collateral
B = 60 day average price of non-stablecoin collateral
Then the output constant is going to use for calculate each portion as following:
X=C(Zβˆ—Pz),Y=(1βˆ’C)(Zβˆ—Pz)X = C(Z*Pz), Y = (1-C)(Z*Pz)
C = market indicator constant
Z = total synthetics to be minted, Pz = the price of reference asset in USD
X = suggested non-stablecoin collateral to be used
Y = suggested stablecoin collateral to be used
The indicator aims to help the minter shorten the decision period when minting the asset or either maintaining the debt position.
The documentation is still work-in-progress. Stay tuned for more updates soon.
Last modified 2mo ago
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