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
$1 + \epsilon \cdot Inflow_t$
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
$1 - \epsilon \cdot Outflow_t$
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.