xof collateral (
xis the margin) and decides to take on the volatility of an amount
yof the same collateral (
yis the amount committed, or the position size) that was brought by users minting stablecoins, then the protocol stores
y, the oracle value and the timestamp at which this HA came in.
x, plus or minus the capital gains or losses of the amount
yshe decided to back.
in stablecoin valueneeded by the protocol to pay back users in case they all want to burn their stablecoins. For example, if a user brings 1 wETH to mint 2000 agEUR, and another one burns 1000 agEUR, the amount to hedge is 1000 EUR of wETH. HAs are able to hedge a fraction of this quantity (close to 100%): this is called the target hedge amount.