Keiko Finance
  • Introduction
  • Protocol Overview
    • KEI Stablecoin
    • Collateral Tokens
    • Vaults Overview
  • Collateral Parameters
  • TUTORIALS
    • Vault Management
      • Creating a Vault
      • Adjusting a Vault
  • Vaults Interest Model
    • Interest Rate Model
  • Redemption Mechanism
    • Redemptions Model
    • ARS Simulations
  • ADMIN POWERS
    • Immutability and Admin Powers
    • Risk Mitigations
  • KEIKO TOKEN INFORMATION
    • Points Program
    • TGE Allocations
  • PROTOCOL INFORMATION
    • Security and Audits
    • Protocol Contracts
  • LINKS
    • Keiko App
    • Twitter
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  1. Redemption Mechanism

Redemptions Model

The Keiko Protocol's Vault redemption model ensures that KEI stablecoin maintains its peg by allowing 1:1 redemption of KEI for the collateral held in Vaults, albeit with an associated fee. This feature is crucial for maintaining the price stability of KEI and providing a fail-safe mechanism for holders.

Redemption Mechanism

1:1 Redemption: Anyone can redeem KEI 1:1 for the collateral in any Vault, subject to a transaction fee. This mechanism is designed to ensure that KEI never falls below its target price.

Calculation of Redemption Priority

  • Nominal Collateral Ratio (NCR): This is calculated as the Collateral value divided by the Debt value for each vault.

NCR=Collateral/DebtNCR = Collateral / DebtNCR=Collateral/Debt

  • Minimum Collateral Ratio (MCR): Each vault has an MCR defined, which is critical for determining its financial health.

  • MCR Factor: A parameter used to tweak the weight of the MCR Component.

  • MCR Component: This is derived by multiplying the vault’s MCR by the mcrFactor.

MCRComponent=mcrFactor∗MCRMCR Component = mcrFactor * MCRMCRComponent=mcrFactor∗MCR

Adjusted Redemption Score (ARS)

ARS=NCR+mcrComponentARS = NCR + mcrComponentARS=NCR+mcrComponent

  • The ARS for each vault is calculated by adding the Nominal Collateral Ratio (NCR) to the MCR Component.

  • The ARS determines the order in which vaults are redeemed; the vault with the lowest ARS is given priority in redemption.

  • Vault owners can increse their ARS by increasing their NCR and their MCR

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Last updated 10 months ago