Synthetic Assets (tAssets)
Twindex Synthetic Assets (tAssets) are the first fractional-algorithmic synthetic assets. Each tAsset represents its respective real-world asset. tAssets are partially backed by KUSD (a stablecoin) and TWX (a utility token) where KUSD represents its value and TWX increases its utility. The ratio between the stablecoin and the utility token is dynamic and adjusts according to the market. This ratio is called the Collateral Ratio.
This fractional-algorithmic token combines both advantages of asset-backed tokens and algorithmic tokens together. Unlike fiat currency, tAsset has its value backed by the collateral while maximizing its capital efficiency that reduces the required collateral as much as possible.
This is where algorithmic stablecoin is good at - creating value without having to have backed assets.
The real-world price is interfaced from an Oracle, which its duty is to fetch the price in the real world and interface the price to the Blockchain system and that information can be used by the smart contracts.
If the market is closed, the price at close will be used as the reference price.
Twindex is powered by ChainLink which provides the real-world price by aggregating a number of real-world exchanges and interfaces the price to Blockchain. You can read more about how it is done at ChainLink documentation.
Twindex has mechanisms to incentivize investors to keep the price close to the real world, both when the Twindex price is in premium (higher than real-world price) or at a discount (lower than real-world price)
To keep the tAsset price the same as real-world price, we present several mechanisms to help keep the price on the peg. Anyone can make a profit when there are price premiums and price discounts by minting and redemption. As the ratio changes, anyone is also incentivized to keep the backed assets correlated to the Collateral Ratio with buybacks and re-collateralization.
As this is a relatively new concept in the world of synthetic assets, there are certain risks regarding how the mechanism will work in a real-world scenario. While the new mechanism has been battle-tested, we highly recommended you advise our investors to understand the mechanism thoroughly before investment.
To prevent a negative feedback loop, we will impose an appropriate mint cap for each tAsset to control the supply of the market in order to prevent panic redemption from our system for some time after the launch. The mint cap will gradually be increasing as the platform has shown its strength and confidence to our investors to increase the capabilities of our platform.
Last modified 1yr ago