Community Forum 10 March

notes.md

Scaling Hubble

1. Peg stability

   • The basics:
     • if USDH below peg -> need to create demand
     • if USDH above peg -> need to create supply
   • Before: Redemptions / Burn
     • if USDH below peg 0.95 -> start with 100 UST -> buy 105 USDH -> redeem 105 USDH for 105 SOL (from users with highest LTV) -> users get redeemed, but "BUYING" USDH creates demand and restores peg
     • if USDH above peg -> no delta-neutral arb (as we have observed)
   • After: PSM + SF
     • if USDH above peg 1.05 -> deposit UST in PSM 100 UST -> 100 USDH -> mint 1:1 USDH -> sell it on Saber, make the arb -> this builds up a UST reserve
     • if USDH below peg -> burn USDH:UST into PSM -> redeem UST from reserve -> this depletes the UST reserve
     • if PSM is depleted -> raise SF: -> buy usdh and repay loans -> take SF and give it to USDH stakers - HSR

2. Predictable loan experience:

   • Clearer risk management
   • Remove Recovery Mode
     • Simple per/loan LTV, no more global recovery mode
     • 75% ->
     • 90.9%
   • Remove Redemptions
   • SOL 80 100
   • BTC 90 200 -> weighted LTV (100 * 80 + 200 * 90) / 300 = 86.66666666666667

3. Ideas:

   • liquidation protection -> unwind 5% of position if close to liquidation & SF positive
   • performance fees from yield -> repay loan/stability fee
   • 2% -> 2/num_minutes_per_year -> add 0.00000001 USDH debt per minute
   • HBB as collateral with low LTV