Buyback and Re-collateralization
As the Collateral Ratio changes, it will make the current ratio of KUSD and TWX used to back tAssets off. To maintain the ratio, we incentivize anyone to help make the ratio of KUSD and TWX correspond to Target Collateral Ratio.

Re-collateralization

When the Target Collateral Ratio increases, there will be a deficit of KUSD in the system. In this case, the platform allows for re-collateralization by supplying the amount of KUSD and getting the same value of TWX worth the same as supplied KUSD in return, plus some amount of bonus to incentivize arbitrageurs to quickly provide the required collateral.
TWX=KUSDΓ—PKUSDPTWX(1+B)TWX = \frac{KUSD\times P_{KUSD}}{P_{TWX}}(1+B)
Given that:
P_TWX is the price of TWX
P_KUSD is the price of KUSD
B is the bonus return
Simplified example of re-collateralization
There is a 0.6% re-collateralization fee.

Buyback

When the Target Collateral Ratio decreases, there will be a surplus of KUSD in the system. In this case, the platform allows for buying back by supplying the amount of TWX and getting the same value of KUSD in return.
The received collateral can be calculated with this formula:
KUSD=TWXΓ—PTWXPKUSDKUSD = \frac{TWX\times P_{TWX}}{P_{KUSD}}
Given that:
P_TWX is the price of TWX
P_KUSD is the price of KUSD
Example:
In this example, there is a total of $100m collateral for all tAssets in the market. As overall tAssets price increases, the Collateral Ratio decreases. From the change in Collateral Ratio, there is now $250,000 of KUSD which is now overcollateralized and is open for buyback to happen. When buyback happens, surplus KUSD is withdrawn to the person who does the buyback, and provided TWX of the same value will be burned from the system.
Simplified example of buyback process
There is a 0.6% buyback fee.
Last modified 2mo ago