Minting USDR
Users will always be able to mint USDR 1:1 by depositing DAI as collateral. They’ll also be able to burn USDR, redeeming it for DAI or TNGBL.
TNGBL may also be used for minting as long as the USDR treasury has a minimum of 88% other assets. Once the 88% threshold of real estate + DAI + protocol-owned liquidity is met, TNGBL is unlocked for minting at a 2:1 value, TNGBL to USDR.
For example if the current property + DAI + liquidity backing of USDR is 89%, 1% of the supply of USDR can be minted using TNGBL. At this point in time, $20 of TNGBL could be used to mint $10 in USDR.
To ensure that an appreciation in the price of TNGBL does not negatively impact the protocol’s ability to mint 12% of USDR with our token, we’ve implemented a mechanism to automate a burn of TNGBL in the treasury. If the average price of the TNGBL used to mint USDR increases by any more than 1%, the treasury will burn 1% of the TNGBL it’s holding to maintain balance. This avoids a hypothetical situation where an appreciation in the price of TNGBL outpaces the growth of USDR, thus capping minting. For example, if the price of TNGBL were to double, but the market cap of USDR only increased by 20% in that same time, there would be no way to mint with TNGBL as the the native token would now represent a much larger than 12% share of the backing vs real estate, DAI and protocol-owned liquidity. The new burn mechanism ensures that the 12% threshold is always maintained.
Conversely, if the price of TNGBL were to fall, there’s an additional 12% remaining in the treasury for collateralization due to the 2:1 mint ratio. While we only allow for 12% of the recorded collateralization of USDR to be TNGBL, there’s always an equivalent amount in the treasury that serves as emergency backing. This TNGBL will never count towards the overcollateralization of USDR, that can only be achieved through the appreciation of real estate and fees from protocol owned liquidity. It can however help to maintain the 12% TNGBL backing.
Copy link