Multi-Asset-Reserve
Last updated
Last updated
First let's introduce a new term, Reserve Ratio (RR). The Reserve Ratio (RR) is the total reserve's value against total TiUSD in circulation.
Where the R_{reserve} is the total reserve's value in TiTi Protocol, and the Q_{TiUSD} is the total TiUSD in circulation.
In order to expand TiUSD's market cap, MMF can further meet users’ needs for multi-asset transactions while avoiding the single-point risk of the protocol and improving the robustness of the protocol. In the following session, TiTi Protocol is expanding to multi-asset M-AMMs. Assuming that the protocol is composed of three TiTi-AMM pools, or three kinds of asset reserve, namely TiUSD-USDC, TiUSD-ETH, and TiUSD-WBTC, RR should be:
It means that the anchor price of each market-making transaction channel remains the same, that is, TiUSD's Peg Price:
The function ensures that the Protocol can achieve a balance of risks by selecting multiple assets, reducing the impact of violent fluctuations of a single asset on the Protocol as well as ensuring the security of the PRV. During the ReOrders interval, the short spreads between M-AMMs can quickly flatten by arbitrageurs. Eventually, price consistency will be achieved. Referring to the above back-testing use cases with 3 trading pool TiUSD-ETH, TiUSD-DAI, TiUSD-USDC. The initial liquidity of each trading pool is the same. They each account 1/3 of the total circulation of DAI on the Jan ,1st 2020. The subsequent changes in circulation are evenly distributed among the 3 trading pools, the following charts show the change of TiUSD's Peg Price and RR:
As shown, when the protocol is composed of multiple assets reserve, it can not only avoid the impact of violent fluctuations in the price of a single asset to a certain extent, but also enjoy the benefits of volatile asset appreciation. in addition, composition ratio of basic assets can be further adjusted through community governance in order to more robustly control the single-point risk. Similar to the operation of swapping positions, this ratio change can hold controllable risks and maximize efficiency gains alpha benefit.
In parallel, in the multi-asset reserve model, the Protocol will issue different Market Maker Funds accordingly, allowing investors to freely choose assets and expected rate of return of each fund. Besides, each MMF maintains the independent income. For example, the USDC Market Maker Fund participants will only enjoy the income generated by TiUSD-USDC market making for fairness.
