Gyroscope AMM
The Testnet Alpha AMM calculates prices for minting and redeeming Gyro Dollars as a linear function of recent inflows and outflows and depending on the health of the reserve portfolio.

Minting

If the reserve capital per Gyro Dollar is < $1, then new Gyro Dollars can be minted for $1 worth of reserve assets. Otherwise, new Gyro Dollars are minted for a price of
1+ϵInflowt1 + \epsilon \cdot Inflow_t
dollar value of reserve assets, where Inflow_t measures the rate of recent minting activity (inflows). Accounting for inflows prices the value of insurance from an over-collateralized reserve.

Redeeming

If the reserve capital per Gyro Dollar is > $1, then Gyro Dollars can be redeemed for $1 worth of reserve assets. Otherwise, Gyro Dollars are redeemed for
1ϵOutflowt1 - \epsilon \cdot Outflow_t
dollar value of reserve assets, where Outflow_t measures the rate of recent redemption activity (outflows). Adjusting the redemption price to reflect recent outflows provides a variable disincentive for redemption, mitigating incentives for short-term currency crises.
The parameter is tuned to change prices by $0.01 per $100k of inflows/outflows. Note that this is a simplified version of the AMM that is envisioned for later versions of the protocol. See the white paper for further details.
Last modified 7mo ago
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