Protocol Considerations
NEPRI TFA allows users to issue synthetic assets that track the price of real-world assets. Building this type of system requires an intricate economic foundation. Since the system is inherently leveraged, there are several key considerations to ensure it remains sufficiently collateralized and thus solvent:
• Collateralization - What is the appropriate collateral to back these synthetic assets? What is a safe, yet efficient leverage ratio?
• Synthetic Creation / Closure Dynamics - How are synthetic assets minted or burned?
• Risk Management - Is risk pooled or segregated amongst different types of synthetic assets? How does the protocol liquidate undercollateralized positions?
• Price Oracle - How does the protocol source a robust, decentralized price feed?
• Decentralized Exchange - How are synthetic assets traded? How are long or short positions expressed?
• Governance Token & Liquidity Incentives - What is the purpose of the native system token? How
are system liquidity and market depth bootstrapped? What is the appropriate protocol fee? How is value distributed and accrued to protocol stakeholders?
Last modified 1yr ago