OctoLSD
  • 📖overview
    • Background
    • OctoLSD
  • 🏳️‍🌈project introduction
    • Aggregation
    • Distribution
      • $LSDD
        • Minting
        • Redemption
        • Liquidation
        • Pegging mechanism
    • $Octo War
    • Tokenomics
    • Genesis Farm
    • Public sale
    • Contracts
    • Audits
  • 🛣️Future
    • Roadmap
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  1. project introduction
  2. Distribution
  3. $LSDD

Pegging mechanism

$LSDD is pegged to the price of USD by redemption and liquidation. And the pegging process is driven by arbitrage opportunities.

The ability to redeem $LSDD for ETH at face value (1 $LSDD for $1 of ETH) and the minimum collateral ratio of 150% create a price floor.

When $LSDD price falls below $1:

  • Buy 1 $LSDD at the price of less than $1

  • Exchange 1 $LSDD for $1 worth of ETH through the redemption

  • Arbitrage opportunities will incentivize buying demand for $LSDD, thus bringing the price of $LSDD back to $1.

When $LSDD price rises above $1:

  • LSDD protocol will automatically convert more LSD interest(ETH or LSD) into $LSDD

    • The conversion rate can also be adjusted by OctoDAO.

  • More $LSDD supply will bring the price of $LSDD back to $1

In addition to the above two main pegging mechanisms, OctoDAO can also adjust the supply and demand of $LSDD by changing other rates in the LSDD protocol, to make $LSDD more stable.

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Last updated 2 years ago

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