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  1. Solutions Overview

Peg Arbitrage Mechanism

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Last updated 11 months ago

There is one presently available trade strategy available to users to profit from a price dislocation of USDi in external markets from what it is actually worth:

Cross Market Arbitrage: purchasing or selling USDi into the protocol mint & redeem contract when USDi price has diverged from $1.

Trade Strategies

It's important to keep in mind:

  • USDi is backed strictly by the protocol backing assets.

  • USDi is able to be minted & redeemed on demand by authorized, whitelisted users. This means that at any time, approved users are able to ramp in & out to a digital asset of their choice.

  • The value & amount of USDi's underlying backing is generally unaffected by any dislocations or rapid movements of price across any Centralized/Decentralized Spot Market, AMM Protocols, etc.

  • The value of the collateral underpinning USDi is generally unaffected by the removal of liquidity in volatile markets.

1. Cross Market Arbitrage

This strategy enables any user approved to mint/redeem to profit from the difference between the price/amount users' are able to mint/redeem USDi with Injera & the value of USDi in an external market. An external market includes all centralized & decentralized spot markets such as "USDi/USDC" and AMM Protocols such as DojoSwap.

If USDi is worth LESS in an external market than from Injera directly, a user could:

  1. Buy 1x USDi at 0.95 from DojoSwap using USDC.

  2. Redeem 1x USDi at 1.00 from Injera receiving ETH.

  3. Sell the received ETH for USDC on DojoSwap.

  4. Profit.

If USDi is worth MORE in an external market than from Injera Labs, a user could:

  1. Mint USDi using ETH from Injera Labs.

  2. Sell the USDi in the DojoSwap pool for > 1.00 for USDC.

  3. Buy ETH using USDC on DojoSwap.

  4. Profit.

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