rDPX V2 is a new system which involves a series of changes and additions to the current utility of the rDPX token.

Glossary

1. Backing Reserve - ******The reserve of tokens which back the amount of dpxETH in supply, there are 2 token reserves: rDPX Backing Reserve and ETH Backing Reserve
2. Treasury Reserve - The reserve of tokens held by the treasury for decaying bonds and discounts provided on the bonding process.
3. Core Contract - The contract that handles the PSM, backing reserve and bonding processes
4. AMO - Algorithmic Market Operations Controller
5. APP - Atlantic Perpetual Put Option

rDPX V2 introduces a new synthetic coin dpxETH which is pegged to ETH. dpxETH will be used to earn boosted yields on ETH and will be a staple collateral token for future Dopex Options Products.

The rDPX bonding process represents the method in which new dpxETH tokens can be minted. When a user bonds with the rDPX V2 contract they receive a receipt token. A receipt token represents ETH and dpxETH LP on curve.

Via the bonding process new dpxETH is minted and its backing is maintained via a rDPX and ETH reserve (the Backing Reserves). These backing reserves are controlled via AMOs. To ensure a safe and controllable way to scale rDPX V2 and dpxETH together we have decided incorporate the AMO ideology from Frax Finance (https://docs.frax.finance/amo/overview).

Bonding Mechanism

There are 3 ways a user can bond on the Bonding contract; regular bonding, delegate bonding or using a decaying bond.

Regular bonding:

Assumptions: ETH @ $2000, rDPX @ $20

• To mint a bond carrying approx. 1 Receipt Token you will deposit 25 rDPX (25%) & 0.75 ETH (75%) + the premium for the size of the rDPX provided for an rDPX Atlantic Perpetual PUT option which is 25% out of the money. You receive a discount on the rDPX & ETH provided.
• Discount is calculated in the following way: Discount = (Discount Factor * sqrt(rDPX Treasury Reserve) where the discount factor is a value set by governance.
• During the bonding process a series of actions are performed by the contract:
  • The full amount of rDPX and 33% of the ETH provided (33% of 75% = 25%) is sent to the Backing Reserve and used to mint dpxETH which is then paired with the rest of the ETH to LP on curve.
  • 50% of the rDPX provided for bonding is burnt from the Treasury Reserve and another 50% is sent as emissions to veDPX holders. These percentages are variable and can be controlled by governance.
  • The discount provided on the rDPX and ETH is covered by the Treasury Reserve, the same amount of rDPX (in ETH value) is sent to the Backing Reserve.
  • Finally a reLP process is applied on the Uniswap V2 liquidity added by the Uniswap V2 AMO. This is toggleable and hence may or may not be used on every bond execution depending on the market conditions of rDPX. reLP is the process by which part of the Uniswap V2 liquidity is removed, then the ETH received is swapped to rDPX. This essentially increases the price of rDPX and also increases the Backing Reserve of rDPX.
    • rDPX to remove: ((amount_lp * 4) / rdpx_supply) * lp_rdpx_reserves * base_relp_percent where base_relp_percent = Math.sqrt(reserves_rdpx) * relp_factor
    • A higher relp_factor leads to higher target rDPX price.