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According to the current whitepaper draft, early chicken-ins (before reaching the cap) increase the redemption price.
While this seems nice at first sight, it doesn't contribute to the premium at all. On the contrary, it actually moves the redemption price upwards and the fair price downwards, reducing the premium. To mitigate this, we could move a higher fraction of the bonded amount to the DEX, such that the redemption price is kept constant.
The text was updated successfully, but these errors were encountered:
According to the current whitepaper draft, early chicken-ins (before reaching the cap) increase the redemption price.
While this seems nice at first sight, it doesn't contribute to the premium at all. On the contrary, it actually moves the redemption price upwards and the fair price downwards, reducing the premium. To mitigate this, we could move a higher fraction of the bonded amount to the DEX, such that the redemption price is kept constant.
The text was updated successfully, but these errors were encountered: