Purpose

This STP proposes to make Restorative Rebase described in STP 8 take effect immediately when the TWAP of a τAsset drops below 1.0.

The STP aims to eliminate the perverse incentive for certain market participants to rush to sell τAsset before a fixed time of a day to front-run an epoch of Restorative Rebase set to occur at that time.

Details

The team has noticed that when Restorative Rebase described in STP 8 is set to occur at 08:00 pm (SGT) on a certain day, many market participants will rush to sell their τAsset before that fixed time to avoid paying the Restorative Contribution. This creates a perverse incentive that could worsen price discount and weaken price peg.

The team now proposes Responsive Restorative Rebase as an improvement. If this STP is passed, Restorative Rebase will take effect, and all outgoing transfers (other than those whitelisted) of the relevant τAsset must pay a Restorative Contribution, as soon as the TWAP of the τAsset drops below 1.0. Restorative Rebase will remain in effect until the TWAP of the τAsset restores to 1.0. Other details of STP 8 remain unchanged.