Parameters

GSVM Algorithm Controls

The Gold Stability Valuation Mechanism relies on several key parameters that governance can adjust to optimize performance across different market conditions.

Core Weighting Parameters

  • Alpha (α): Controls how heavily the system weights the 120-day EMA (default 0.80, adjustable between 0.65-0.95)

  • Beta (β): Determines the 90-day EMA influence within the secondary weighting (baseline 0.70)

  • Sensitivity coefficient (k): Governs how aggressively α adjusts to volatility changes (typically 0.15-0.25)

Adjustment Constraints The system includes built-in safeguards to prevent erratic parameter changes. Daily α adjustments cap at 1.5%, with individual changes limited to 5%. After significant recalibrations, there's a mandatory 7-day cooldown period.

Volatility Regime Definitions Market conditions get classified based on how current volatility compares to the 180-day average. Standard conditions fall within ±15%, elevated volatility exceeds this by more than 15%, while extreme conditions show deviations above 40%.

GUSD Collateralization Framework

Loan-to-Value Ratios GR tokens can be leveraged at 85% LTV under normal conditions, though this can drop to 75% during market stress. Traditional stablecoins like USDC maintain 100% backing ratios.

Liquidation Mechanics Positions become eligible for liquidation when the health factor drops below 105%. Liquidators receive a base 7% discount, with urgency bonuses adding up to 3% more when positions become critically undercollateralized.

Revenue Distribution

Allocation Framework Protocol revenue splits four ways: 35% each to GR and GUSD holders, 15% to the insurance fund, and 15% to the team (this last allocation is permanently fixed). The adjustable portions can be modified by up to 5% per governance cycle, subject to a 7-day timelock.

Insurance Fund Management

Funding Sources The fund receives 15% of daily protocol revenue plus all liquidation penalties. User deposits earn 10-25% APY but face potential 20% principal exposure during extreme market events.

Size Controls Target fund size scales with total value locked, capped at 20% of protocol TVL. When the fund exceeds this threshold, surplus flows to GUSD holder rewards.

Governance Process Parameters

Participation Thresholds Creating proposals requires 50,000 CREEK tokens staked for at least 3 days. Passing requires a 2 million token quorum (2% of total supply) and simple majority approval.

Timing Structure The governance cycle includes a 2-day review period, 5-day voting window, and 2-day execution delay. Approved proposals must be executed within 30 days or they expire.

Emergency Controls A 5-of-7 multisig can implement emergency measures lasting up to 72 hours, though function pauses are limited to 12 hours maximum. After any pause, there's a mandatory 72-hour cooldown before the same function can be paused again.

Risk Management Triggers

Market Stress Responses When gold volatility exceeds 15% over 30 days, collateralization requirements automatically adjust downward by 2% for every additional 5% of volatility. System-wide alerts trigger at 150% collateralization ratios.

Black Swan Protocols Extreme events (>10% gold price moves in 24 hours or system health factors below 110%) activate emergency protocols that immediately reduce GR collateralization requirements by 10%. Governance must confirm or modify these changes within 48 hours.

Utilization-Based Adjustments As GR utilization climbs through 80%, 85%, 90%, and 95% thresholds, collateralization requirements decrease by 1%, 2%, 3%, and down to the 75% minimum, respectively.

These parameters work together to create a self-regulating system that can adapt to changing market conditions while maintaining stability and security. The governance framework ensures that parameter modifications follow a deliberate process that protects against hasty decisions while enabling necessary adjustments.

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