QIAN.finance Documents
  • QIAN.finance knowledge base
  • QIAN.finance 知识库
  • QIAN V2 Whitepaper
    • QIAN V2: Innovative decentralized fractional-algorithmic synthetic assets protocol
    • Price Stability of QSD
    • QSD Minting
    • QSD Redeeming
    • KUN token
    • Buybacks & Recollateralization
    • Bond stabilization
    • Liquidity mining Programs & Governance mining
    • Conclusion
  • QIAN V2 白皮书
    • QIAN V2:创新的去中心化分数算法合成资产协议
    • QSD 的套利稳定机制
    • QSD 铸币
    • QSD 赎回
    • KUN 代币
    • 回购和再抵押
    • 债务稳定
    • 流动性挖矿计划与治理挖矿
    • 总结
  • QIAN V1 whitepaper
    • QIAN V1: crypto-assets backed stablecoin protocol
    • Introduction to QIAN stablecoin protocol
    • Locked asset management
    • Stability management
    • External systems
    • System governance
    • Reference
  • QIAN V1 白皮书
    • QIAN V1:加密资产储备型稳定币协议
    • QIAN V1 介绍
    • 锁定物管理
    • 稳定性管理
    • 外部系统
    • 系统治理
    • 参考文献
Powered by GitBook
On this page
  • Recollateralization
  • Buybacks

Was this helpful?

  1. QIAN V2 Whitepaper

Buybacks & Recollateralization

PreviousKUN tokenNextBond stabilization

Last updated 2 years ago

Was this helpful?

During the operation of QIAN V2, there may be a mismatch between the value of the collateral and the collateral ratio: when the total value of the collateral is less than the current collateral ratio of the system, the collateral needs to be increased; when the value of the collateral exceeds the ratio of the collateral ratio, the excess collateral value can be allocated to KUN holders. To quickly redistribute value back to KUN holders or increase system collateral, two functions are built into the protocol: buyback and recollateralization.

Recollateralization

When the actual collateral ratio of the system is lower than the nominal collateral ratio, the system requires users to replenish the collateral. This process is called recollateralization. Anyone can call the recollateralization function which then checks if the total collateral value in USD across the system is below the current collateral ratio. If it is, the system allows the caller to add up to the amount needed to reach the target collateral ratio in exchange for newly minted KBT at a bonus rate. The bonus rate is set to 0.5% to quickly incentivize arbitragers to close the gap and recollateralize the protocol to the target ratio. The incentive amount can be adjusted through community governance in the subsequent operation of the agreement.

KBTreceived=(Yi∗Pi)(1+Br)PKKBT_{received} = \frac{(Y_i*P_i)(1+B_r)}{P_K}KBTreceived​=PK​(Yi​∗Pi​)(1+Br​)​

Where:

YiY_iYi​ is the amount of collateral iii required to reach the collateral rate;

PiP_iPi​ is the price for collateral iii provided by the Chainlink Oracle;

BrB_rBr​ is the percentage of the reward KUN minted during recollateralization;

PKP_KPK​ is the market price of the KUN token, provided by the weighted average prices of DEX pool.

Example D

Assuming that the system is in a state of insufficient collateral at this time, it needs $500,000 of collateral to reach the target mortgage rate. The user can call the recollateralization function and provide $500,000 worth of collateral to the protocol. At this time, the user can receive KBT tokens equivalent to 500,000×1.05, and the reward amount is 5%.

Placing 500,000 BUSD($1.00/BUSD), the KUN price is $6.00/KUN, the calculation process is as follows:

KBTreceived=(500,000×1.00)(1+0.05)6.00=87,500KBT_{received} = \frac{(500,000×1.00)(1+0.05)}{6.00} = 87,500KBTreceived​=6.00(500,000×1.00)(1+0.05)​=87,500

Buybacks

The opposite scenario occurs when there is excess collateral in the system than required to hold the target collateral ratio. This can happen in several ways:

  • The protocol has been lowering the collateral ratio successfully keeping the price of QSD stable;

  • Interest bearing collateral is accepted into the protocol and its value accrues;

  • Minting and redemption fees are creating revenue;

In such a scenario, any KUN holder can call the buyback function to exchange the amount of excess collateral value in the system for KUN which is then burned by the protocol.

To effectively redistributes excess value back to the KUN distribution and holders, we expect the users to actively participate in buybacks to gain value since there is 1% bonus rate for the buyback function, with the consumption in buyback, KUN also has expectations of value growth. After the buybacks occurs, since some KUN will be burned, it can also bring added value to all KUN holders.

Where:

QIAN V2 supports a variety of collateral, so when buyback happens, the system will allow users to choose the collateral by themselves. Suppose the amount of certain collateral is completely repurchased and the collateral ratio still cannot return to the target value. In that case, the user can continue to choose other collateral to repurchase until the target collateral ratio is achieved.

Example E

There is 60,000,000 QSD in circulation at a 60% collateral ratio. The total value of collateral across the BUSD, BNB, BTCB pools is 40,000,000 USD. There is 40,000,000 USD worth of excess collateral available for KUN buybacks. In the three kinds of collateral, the total value of the lowest is BTCB(3,700,000 USD). Assuming that a user chooses to exchange BTCB with KUN, then after exchanging all BTCB, the user can still exchange BUSD or BNB with KUN equal to 300,000 USD.

If the user chooses to exchange a BNB equivalent to 4,000,000 USD at the beginning, and the price of BNB is $42.5/BNB and KUN is $10/KUN, then:

Collaterali, received=K×PKPiCollateral_{i,\ received} = \frac{K×P_K}{P_i}Collaterali, received​=Pi​K×PK​​

KKK is units of KUN to be burned in buyback;

PKP_KPK​ is the market price of the KUN token, provided by the weighted average prices of DEX pool;

PiP_iPi​ is the price in USD of collateral iii, provided by Chainlink Oracle.

KUNburned=4,000,00010=400,000 KUNKUN_{burned} = \frac{4,000,000}{10} = 400,000\ KUNKUNburned​=104,000,000​=400,000 KUN
BNBreceived=400,000×1042.5=94,117.64705882 BNBBNB_{received} = \frac{400,000×10}{42.5} = 94,117.64705882\ BNBBNBreceived​=42.5400,000×10​=94,117.64705882 BNB