Can a big brain explain how the Curve AMO worked

Question

Can a big brain explain how the Curve AMO worked

in decreasing FRAX supply (2.6b to 2.0b) while # of FXS burned increased only marginally? I'm sure I am missing something, keen to understand better how this works. I understand how this would work in event of Lending AMO, I may not follow how Curve AMO works.

#cryptocurrency #english #frax

0

11.05.2022

5 ответов

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Sam Kazemian ¤⛓️¤

FRAX has more than enough AMO controlled liquidity to keep the peg perfect even if every single person sold into Curve. As Seb said, the AMO burns excess FRAX from its LP it controls to keep the peg even tighter. The AMO has been rebalancing and burning 400m+ FRAX every few hours exactly as designed in the past day. The cool thing is that this is anti reflexive because as the AMO burns more FRAX out of the pool, the LPs that actually stay earn more APR by being an increasingly large portion of the total TVL left. So the AMO actually creates an anti-bank run mechanism which is even more powerful.

0

11.05.2022

Alex C Автор вопроса

Sam Kazemian ¤⛓️¤
FRAX has more than enough AMO controlled liquidity...

Sam, thanks so much. My final question if you don't mind (or, fielded to anyone). Can you help explain the math here? I think this will further clarify.

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11.05.2022

Sam Kazemian ¤⛓️¤

Alex C
Sam, thanks so much. My final question if you don...

The calculation in that example is basically the concept I was explaining before. If for example the AMO controls $1B of TVL in the Curve pool with an A factor of 1500, then that means 600m FRAX at minimum need to be sold into the Curve pool to depeg. If there is not 600m FRAX owned by other users anywhere else in existence, it is not mathematically possible to depeg FRAX. I made up the numbers but the concept is the same. Right now we are in the same situation. The protocol controls more than enough of the Curve pool that there does not exist enough FRAX in the open market to depeg the price.

0

11.05.2022

James Glasscock | Reserve.org

Sam Kazemian ¤⛓️¤
FRAX has more than enough AMO controlled liquidity...

are there any more detailed writeups on this "anti-bank run mechanism"? seems revolutionary, think i am getting it, not sure

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31.05.2022

Seba TLDR · Accepted Answer

Seba TLDR

its just an arbitrager that adds or removes frax based on its balance on the pool

0

11.05.2022

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Can a big brain explain how the Curve AMO worked

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