yof collateral to get
yworth of stablecoins, and Hedging Agents back up exactly this amount
yof collateral (after bringing a margin of
pand the current price is
q, now to be able to sustain the convertibility, an amount
y.p/qof collateral is needed to reimburse users.
xof collateral initially brought, the amount of collateral due to (or taken from) the HA is now
x+yin the protocol, what is now due to HAs and users is:
xof stablecoins and HAs already cover this amount, then new ones will not be able to enter the protocol.
p_eand commits to an amount of collateral of
c. HAs are not allowed to hedge more collateral that is in the protocol. To this extent,
cmust be collateral in the protocol's reserves, brought by a user minting stablecoins.
p, if we imagine that there was only
cof collateral in the protocol before the HA came in, then the protocol ends up with:
0.9x/(x-y)becomes superior to
0.95, then some HAs could be cashed out till the amount covered by HAs is back in the bounds again (below the target hedging ratio).