Protocol Reserve Value (PRV)
With Reorders, the protocol can ensure that the average issuance price of TiUSD in the market is always not less than $1, which means that the protocol always has enough funds to repurchase all TiUSD in circulation at $1.
We define the funds as the Protocol Reserve Value (herein after referred to as “PRV”). The protocol guarantees that PRV will only be used to repurchase TiUSD through smart contracts and there will be no illegal misappropriation. In this way, TiUSD holders have plentiful confidence because enough PRV guarantees that the protocol will always have sufficient funds to repurchase the TiUSD in their hands.
TiTi PRV & PAV
Back to the example, it is clear that the counterparty of all user transactions is the protocol itself. It cost Alice 10 USDC to get 9.99 TiUSD. The protocol sells 9.99 TiUSDs and gets 10 USDCs. Therefore, the protocol only needs to reserve 9.99 USDC for Alice and Alice has every reason to believe that the protocol can guarantee that Alice can sell TiUSD at $1 in exchange for USDC anytime. Therefore, PRV will ensure that TiUSD price will never appear to be in an irreversible situation of less than 1$ for a long time, which significantly enhances users' trust in the protocol.