Overview
Propose to turn on the rate controller for TAI to address recent de-pegging of TAI/USD. The rate controller will control the rate of change of the redemption price of TAI.
Effect of the rate controller
If TAI market price is less than redemption price, redemption rate will be positive and redemption price will increase.
If TAI market price is greater than redemption price, redemption rate will be negative and redemption price will decrease.
The greater the market price is de-pegged, the greater the resulting rate will be, negative or positive.
Details
Enable rate controller as a P-only controller. This is how RAI started and is simple and easy to understand for TAI users.
P-only rate controller
perSecondRate = 1 + Kp * error
with
Kp = 222002205862 # 18 decimal number, this is RAI's current Kp value
error = (redemptionPrice - marketPrice) / redemptionPrice # relative error of market price
Example, with redemptionPrice=1, marketPrice=0.95
perSecondRate = 1 + 222002205862/1e18 * error
perSecondRate = 1 + 222002205862/1e18 * (1- 0.95) / 1
perSecondRate = 1 + 222002205862/1e18 * (0.05) / 1
perSecondRate = 1 + 222002205862/1e18 * 0.5
perSecondRate = 1.0000000111001104
# Convert to annual rate
annualRate = perSecondRate ** (86400 * 365)
annualRate = 1.0000000111001104 ** (86400 * 365) ≅ 1.419 # About 42% APY
Noise Barrier
If there is a very small error, the controller will not change rates. This margin of error is called the noiseBarrier and I propose an initial value of 1%. This value can be changed later if deemed to large or too small.
If the market price is within 1% of the redemption price, TAI will have a 0% rate.
Proposed Parameters:
kp = 222002205862
noiseBarrier = 1%
maxRedemptionRate = 80% APY
minRedemptionRate = -80% APY
Example Rates with Proposed Parameters
| Target Price | Market Price | Error | Rate |
|---|---|---|---|
| 1 | 1.10 | -0.10 | -50% |
| 1 | 1.05 | -0.05 | -30% |
| 1 | 1.04 | -0.04 | -24% |
| 1 | 1.03 | -0.03 | -19% |
| 1 | 1.02 | -0.02 | -13% |
| 1 | 1.01 | -0.01 | 0% |
| 1 | 1 | 0 | 0% |
| 1 | 0.99 | 0.01 | 0% |
| 1 | 0.98 | 0.02 | 15% |
| 1 | 0.97 | 0.03 | 23% |
| 1 | 0.96 | 0.04 | 32% |
| 1 | 0.95 | 0.05 | 42% |
| 1 | 0.95 | 0.10 | 80% |
Edit:
The “market price” from above will be a 3 7 day TWAP of TAI/USD.
Poll
- Yes
- No