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BUSD Reserve Model (BRM)

What is the purpose of BRM?

By definition, a reserve refers to a supply that is not needed for immediate use but available if required. In a similar fashion, this model utilises a nominal amount of treasury-held BUSD as a backstop for bYSL. This will not only help make it resilient to market manipulation but will enable holders to be confident that they are always able to sacrifice their bYSL for BUSD at a predictable rate.

How does BRM work?

BRM will only apply to holders of bYSL. Each component of BRM has been put in place to incentivise long-term participation and help ensure the value of bYSL remains stable and resilient to manipulation.
The components of BRM include:

1️⃣ Protective Outer-Layer (POL)

The treasury has been custom-built so that it can only interact with the POL and no other contract. The POL will act as a security sublayer for the treasury contract, as its been structured to only hold a maximum of 25% of the total BUSD held by the treasury. By capping the amount of BUSD that can be held in the POL, we ensure that the bulk of treasury-held BUSD is always insulated from external interaction.
The balance of the POL will act as a backstop for bYSL, whereby the POL will be rebalanced on a daily basis to hold 25% of the total BUSD that is held by the treasury contract. The protocol will draw from the balance held by the POL whenever a user decides to sacrifice bYSL for BUSD.
In short, the POL serves as a critical part of our security for treasury-held BUSD, while still enabling 100% of bYSL holders the capability of sacrificing their holdings at the bYSL backed price.

How does the POL hold 25% of treasury-held BUSD?

The protocol has been designed with a rebalance mechanism to ensure the treasury contract holds 75% of treasury-held BUSD and the POL holds 25%. By default, the protocol will rebalance the POL contract every 24 hours, with the initial rebalance time being set at 24 hours from the time of the last rebalance.
However, to ensure optimal security our protocol will implement a reset of the rebalance time each time the POL balance drops by 10%. As a result, the rebalance time can be reset up to 9 times (i.e. when the POL balance falls below 90%, 80%, 70%, 60%, 50%, 40%, 30%, 20% and 10%). This time delay serves as an additional layer of security for our treasury contract and treasury-held BUSD.
  • To put this into context, lets look at a quick example. Lets say a bad actor were to somehow acquire a large amount of ill-gotten bYSL. In theory, if the rebalance time were to occur daily at a set time, the bad actor could drain the POL moments before the rebalance time, and moments later once the POL is rebalanced. By placing the 24-hour delay before the next rebalance occurs, it will limit the maximum exposure to the current balance of the POL.
  • Please note: this scenario wouldn't be possible in reality due to the Sigma Portal Rate (SPR), Daily Outbound Quota (DOQ) and the BUSD Transmittance Rate (BTR). As a result, when the bad actor does attempt to sacrifice the bYSL for BUSD - they would only be able to immediately sell 0.25% of their bYSL balance (being a new holder) at the bYSL protocol price, and the amount that they would be able to sacrifice is limited to 1% of treasury-held BUSD.

2️⃣ Sigma Portal Rate (SPR)

What is SPR?
  • SPR is the percentage of a holders bYSL balance that is able to be sacrificed at the protocol price at any given time.
  • It will only be applicable when a holder sacrifices bYSL for BUSD via the POL.
How does SPR work?
  • SPR works by limiting the amount of bYSL that can be sold at the protocol price from a wallet, by taking into account when the holder first acquired bYSL or last sold/transferred bYSL.
  • SPR is variable and will start at 0.25%, and every 24 hours it will increase by 0.25% - reaching a maximum of 25% on day 100. However, it will reset back down to 0.25% every time you make an outward transaction of bYSL from your wallet (except when you deposit into the bYSL vault or sacrifice bYSL to participate in the SuperNova).
πŸ‘‰ Example: How does SPR work?
When does my SPR initiate?
  • Your SPR for bYSL will initiate when your wallet balance for bYSL increases above 0. In other words, your SPR will commence the moment you receive bYSL in your wallet.
  • This means, once your balance for bYSL increases above 0, your SPR will be initiated - whereby it will remain at 0.25% for 24 hours, and every 24 hours it will increase by 0.25% - reaching a maximum of 25% on day 100.
Can I sell bYSL above my current SPR?
  • Yes, a user will always be able to sell above their SPR. However, if a user decides they want to sell above their SPR, they will obtain the lower backed price.
  • When it comes to "selling bYSL" (aka sacrificing bYSL for BUSD via the POL), holders have the option of either selling at the protocol price or at the lower backed price.
  • If a user decides they want to sell at the protocol price, they will need to sell a percentage of their balance that is less than or equal to their current SPR.
  • So, essentially, users have the choice of getting more BUSD per bYSL by selling less than or equal to their current SPR, or they can opt to receive the less BUSD per bYSL by selling above their current SPR.
When events will trigger my SPR reset?
  • Your SPR for bYSL will reset back down to 0.25% every time you sell bYSL via the POL for BUSD.
  • Your SPR for bYSL will reset back down to 0.25% every time you transfer bYSL to another wallet.
  • Your SPR for bYSL will reset back down to 0.25% when you use the Transfer All function to transfer your entire bYSL balance to another wallet (Note that your SPR will not re-initiate until your wallet balance for bYSL increases above 0).
  • Your SPR will not reset when you deposit or withdraw from the bYSL vault.
  • Your SPR will not reset when you sacrifice bYSL to participate in the SuperNova.

3️⃣ Daily Outbound Quota (DOQ)

What is DOQ?
  • Every wallet will have a quota of one outbound transaction for bYSL every 24 hours - this represents your DOQ.
  • An outbound transaction will include: when bYSL is transferred to another wallet, when bYSL is sacrificed for BUSD via the POL, and when the Transfer All function is used.
How does DOQ work?
  • DOQ works by limiting the outbound transactions a bYSL holder can perform from a wallet on a daily basis, by taking into account when the holder first acquired bYSL or last sold/transferred bYSL.
When does my DOQ initiate?
  • The 24-hour period will be determined from the time your wallet balance for bYSL increased above 0, OR if you already hold bYSL it will be determined from the time you last performed an outbound transaction.
What happens when I make more than one outbound transaction within a 24-hour period?
  • If you attempt to make more than one outbound transaction of bYSL in a 24-hour period, the transaction will fail and be reverted.

4️⃣ BUSD Transmittance Rate (BTR)

What is BTR?
  • BTR is the maximum percentage of treasury-held BUSD that can be removed when bYSL is sold (burnt) via the POL.
  • The BTR is fixed at 1% per transaction. This means a user is only able to sell bYSL for BUSD that is less than or equal to 1% of the total balance of treasury-held BUSD.
How does BTR work?
  • The BTR acts to minimise market manipulation by restricting the sale of bYSL per transaction in accordance with the total balance of treasury-held BUSD. Whilst this still allows for large sales from a single wallet per day, it protects the treasury from being depleted and ensures that there is sufficient BUSD available to meet demand.
  • BTR will apply to every transaction when bYSL is sold (burnt) in exchange for BUSD.
What happens if I attempt to execute a transaction that is greater than the BTR?
  • When you attempt to sell bYSL for BUSD via the POL, and the amount of BUSD that is to be returned is greater than 1% of the total balance of treasury-held BUSD, the transaction will fail and be reverted.