Formulas and Calculations
The Throttle Module relies on various formulas and calculations to achieve its functionality
Throttle function
Rule for comparing pairs is as following:
Where:
: Borrowing rate
: Throttle surcharge
: Multiplier on borrowing amount
: Potential liquidation amount at risk over market depth
: Rate of increase in borrowing velocity versus supply velocity
: Output tuple representing delta in borrowing/supply and market health factor
: Threshold values for output control
is set of all rational numbers
This means that:
Throttle Function is calculated
Output values are compared with Threshold Values
Further actions are based on the result of comparison
Borrowing and supply velocities
Rate of change of these velocities
Borrow Rate Calculations
Where is a new borrow rate after applying multiplier and surcharge
Total pool at risk ratio
If sudden 50% downside risk, then:
Where:
- primary threshold
- secondary threshold
- pool value at risk
- total value of pool
Rate Adjustment Formula
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