If next CPI print is 1% MoM, does the FPI

Question

Frax Finance

s.n. Nguyen

If next CPI print is 1% MoM, does the FPI

peg go up 1% over 28 days?

#cryptocurrency #english #frax

0

10.04.2022

8 ответов

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DeFiDegen.ETH (¤, ¤)

Sam Kazemian ¤⛓️¤
It's the average yearly inflation, so if the avera...

Hate to be a dick, but ackshually this is imprecise due to compounding The annual inflation can not be just divided by 12 to get to months bc each month compounds upon the next. For example see here https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php Mentioning it just to be sure it is properly coded in the smart contracts

0

10.04.2022

Sam Kazemian ¤⛓️¤

DeFiDegen.ETH (¤, ¤)
Hate to be a dick, but ackshually this is imprecis...

That's actually already accounted for because we take the government's own inflation rate reported through the CPI (which internalizes that calculation). So we can just take the actual CPI-U reported inflation then simply sum the last 12 months' rates together and get the annual inflation rate. When the government reports 1% inflation the past 30 days, it takes into account the time interest of inflation.

0

10.04.2022

Sazid

Sam Kazemian ¤⛓️¤
That's actually already accounted for because we t...

Normally whats a good % inflation a token must have? Any estimate range

0

10.04.2022

DeFiDegen.ETH (¤, ¤)

Sam Kazemian ¤⛓️¤
That's actually already accounted for because we t...

To be clear you can not sum monthly inflation rates. You have to do (1+r1)*(1+r2)*….*(1+r12)-1 to get to annual rate. Where in rn, n is the month number and r is the monthly rate

0

10.04.2022

Sam Kazemian ¤⛓️¤

DeFiDegen.ETH (¤, ¤)
To be clear you can not sum monthly inflation rate...

We use this definition for the peg (at least for FPI v1) because this is what the government actually reports inflation to be for 12 months, first row, All items, Unadjusted 12-mo: https://www.bls.gov/news.release/cpi.nr0.htm

0

10.04.2022

DeFiDegen.ETH (¤, ¤)

Yeah cool, that works! The number you refer to is basically the 12 month rolling inflation rate and therefore isnt vulnerable to the mthly compounding issue i mentioned. So in this example you would multiply the feb 2021 value by 1.079 to get the feb 2022 value.

0

10.04.2022

Frax Goat (¤, ¤)

DeFiDegen.ETH (¤, ¤)
Yeah cool, that works! The number you refer to is ...

If you're asking if the federal reserve will be rendered irrelevant, then yes!

0

10.04.2022

Sam Kazemian ¤⛓️¤ · Accepted Answer

Sam Kazemian ¤⛓️¤

It's the average yearly inflation, so if the average yearly inflation is 12% then every month it will go up by 1%. If the average annual inflation is 8% then every month it will go up by 8/12=.67%

0

10.04.2022

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If next CPI print is 1% MoM, does the FPI

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