🔭Good Coverage

Good coverage is a term coined by Agio. It means that the treasury supports fewer assets than it theoretically could provide -100% coverage for. Following, we present likely scenarios that could result in a good coverage :

If the price of $AGIO rises, good coverage begins to form as treasury capacity increases. The benefits of such a mechanism include:

Eliminate bad coverage

When good coverage begins to form, it can eliminate prior bad coverage. Suppose that the treasury was in a bad coverage state and supported 200% of assets, then if the price of $AGIO goes up by 100% this bad coverage would be eliminated because the treasury now supports all positions up to -100%.

Increase the size of treasury coverage

If there is no bad coverage to eliminate, Agio can increase its coverage capacity, thus letting more people deposit and increasing covered funds