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Optimizing Liquidity Distribution via the Seed Gauge System
In order to minimize the potential for manipulation and value extraction, Pinto does not directly control the value Deposited in the protocol. Instead, it creates incentives to encourage individual participants to collectively oscillate the Pinto price across the value target and align the distribution of Deposited value with the protocol's explicitly stated optimal distribution. Seeds yield more Stalk every Season (i.e., each hour). Stalk entitles Depositors to a portion of future Pinto...
Optimizing Liquidity Distribution via the Seed Gauge System
In order to minimize the potential for manipulation and value extraction, Pinto does not directly control the value Deposited in the protocol. Instead, it creates incentives to encourage individual participants to collectively oscillate the Pinto price across the value target and align the distribution of Deposited value with the protocol's explicitly stated optimal distribution. Seeds yield more Stalk every Season (i.e., each hour). Stalk entitles Depositors to a portion of future Pinto...
Converts: Changing the Price from Within
In order to prevent value from being extracted from the protocol, Pinto rarely takes any action in the open market (e.g., buying and selling). Instead, it creates and regularly adjusts incentives to encourage participation in protocol maintenance. At a high level, there are three primary incentive structures in place within the protocol.The Stalk System creates an incentive to Deposit value into the Silo and leave that value Deposited.The Field creates an incentive to lend to the protocol to ...
Converts: Changing the Price from Within
In order to prevent value from being extracted from the protocol, Pinto rarely takes any action in the open market (e.g., buying and selling). Instead, it creates and regularly adjusts incentives to encourage participation in protocol maintenance. At a high level, there are three primary incentive structures in place within the protocol.The Stalk System creates an incentive to Deposit value into the Silo and leave that value Deposited.The Field creates an incentive to lend to the protocol to ...
The Sun: The Source of Life on the Farm
The Sun is the native timekeeping mechanism fueling Pinto’s autonomous adjustments, giving order and life to the protocol. The protocol requires a way to automatically trigger and pay for protocol adjustments. The Sun handles both of these requirements. Timekeeping Time in the Pinto protocol is measured in Seasons. Every Season lasts ~1 hour. Pinto uses Base blocks as a proxy for time. Due to the consistent time between Base blocks, the protocol can accurately calculate the time based on the ...
The Sun: The Source of Life on the Farm
The Sun is the native timekeeping mechanism fueling Pinto’s autonomous adjustments, giving order and life to the protocol. The protocol requires a way to automatically trigger and pay for protocol adjustments. The Sun handles both of these requirements. Timekeeping Time in the Pinto protocol is measured in Seasons. Every Season lasts ~1 hour. Pinto uses Base blocks as a proxy for time. Due to the consistent time between Base blocks, the protocol can accurately calculate the time based on the ...
The Stalk System: DeFi’s First Bank Run Minimization Mechanism
One of the two primary problems that an algorithmic stablecoin must solve is how to minimize bank runs. Bank runs are inevitable: because there is always less liquidity than value in the system, there is no way for every participant to exit the system without the value of their assets decreasing. The more people who leave, the less value available for others to do the same. Therefore, if some people leave, it can scare others into leaving as well, kicking off a bank run. In other words, algor...
The Stalk System: DeFi’s First Bank Run Minimization Mechanism
One of the two primary problems that an algorithmic stablecoin must solve is how to minimize bank runs. Bank runs are inevitable: because there is always less liquidity than value in the system, there is no way for every participant to exit the system without the value of their assets decreasing. The more people who leave, the less value available for others to do the same. Therefore, if some people leave, it can scare others into leaving as well, kicking off a bank run. In other words, algor...
The Silo: The Perfect Complement to Credit
Pinto fundamentally derives its value and scalability from its creditworthiness. However, creating stability in perpetuity is a significantly more complex problem than simply issuing debt in a sustainable fashion. The Silo, Pinto’s Deposit facility, handles everything from bank run minimization to yield distribution, volatility dampening and liquidity management. The Silo consists of multiple interconnected layers of incentives that each play a part in protocol maintenance. This short article...
The Silo: The Perfect Complement to Credit
Pinto fundamentally derives its value and scalability from its creditworthiness. However, creating stability in perpetuity is a significantly more complex problem than simply issuing debt in a sustainable fashion. The Silo, Pinto’s Deposit facility, handles everything from bank run minimization to yield distribution, volatility dampening and liquidity management. The Silo consists of multiple interconnected layers of incentives that each play a part in protocol maintenance. This short article...
