Treasury covers
Last updated
Last updated
Many issues could arise in the event of a financial crisis. We will explain here why Agio users and $AGIO will not collapse even if the markets crash by -100%.
The $AGIO that is transferred to cover user positions come directly from our treasury which has a fixed number of $AGIO and has two layers of treasury.
Suppose the first layer of treasury has 50 million $AGIO and the current price of $AGIO is at 1 USD. This means that to guarantee a cover if all the assets present in our pools were to make -100% (Highly unlikely) then we could cover 50 million USD in the pools at a maximum.
Our system will therefore guarantee users a full cover even if the global crypto market goes to 0. If the maximum coverage limit is reached then users cannot deposit any more funds.
The price of $AGIO fluctuates and with it the coverage capacity also fluctuates. We've thought about a few scenarios that users could ask :
Suppose the price of $AGIO crashes by 50%, we would then have a treasury that would support 50% less funds. In case it was already filled, it means that Agio is insuring 200% more than his capacity and therefore he could theoretically only insure a total of -50% on all pools. However, this would not be a problem for several reasons :
Firstly, for Agio to no longer be able to insure, all cumulative Agio pools would have to be at -50%. A positive pool and another at -100% would only make -50% in total.
Secondly, everyone would have to remove their cover and therefore $AGIO so that the platform can no longer protect users.
If these two factors occur, Agio has what we called "bad coverage". Several layers of security have been planned. Check them out on our section "Bad Coverage"
