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RE: Understanding the Hive Debt Ratio and the Haircut Rule

in #hbd2 years ago

Do you have the calculations/process for the 'correction'?

For the conversion, we want the existing amount of HBD (X) to be hard-limit (L) of combined market cap (CMC), meaning the existing amount of HIVE (Y) has to be (100-L)% of CMC.
Therefore, a minimal price feed can be computed as ((100-L) * X) / (L * Y)

When the debt ratio is above that hard-limit, the blockchain median price is replaced by this minimal price and is therefore used by the conversion process.

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Thankyou! These are not obvious concepts to calculate since running a currency is not something I do on a daily basis! Bookmarked for future reference.