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Introduction to FLAT
$FLAT is an over-collateralized and crypto asset-backed stablecoin, meaning every $FLAT in circulation is always backed by cryptocurrency assets greater than its value. The launch of $FLAT will provide an opportunity to our users to maximize their capital efficiency while also expanding our sources of revenue for LATTE buyback & burn program, strengthening LATTE deflationary mechanisms.
$FLAT - A stablecoin that maximizes your capital efficiency! ๐
We developed $FLAT with the intention to help our users attain the highest level of capital efficiency. The arrival of $FLAT will allow our users to put up their LP tokens as collateral to borrow $FLAT. The list of eligible LP tokens as collateral to mint $FLAT can be found here.
While the collateral is staked, LatteSwap's smart contracts will stake the collateralized LP tokens on behalf of the position owners, earning them farming rewards. At the same time, the $FLAT borrowed can be used to provide LP to the $FLAT-BUSD liquidity pool at LatteSwap to earn LATTE incentive rewards, or swapped into BUSD and used for other purposes both inside and out side the cryptocurrency space.
This means that the position owners can keep earning rewards in the form of trading fees and incentive rewards from their collateralized LP tokens, while also participating in more earning opportunities using $FLAT, thereby maximizing their capital efficiency!
$FLAT is an improved version of Abracadabra's MIM ๐ช
Two of the key improvements weโve made are as follow:
1. Addition of the Close Factor parameter:
To help limit the negative impact of liquidation on our users, weโve decided to add Close Factor, a parameter which is not present in $MIM. The close factor determines the maximum amount of the outstanding debt value that can be liquidated in a transaction.
Without the Close Factor, your whole position could be liquidated even if the price of the collateralized asset drops a tiny bit below the liquidation threshold, forcing the position owner take a bad price on all the collateralized asset even though only a small portion of the collateral couldโve been sold to bring the position back to above the liquidation threshold.
With the addition of Close Factor, $FLAT position owners can rest assured that in an unfortunate event of liquidation, only a portion of their collateral is liquidated.
2. Addition of the Minimum Debt Balance parameter:
To minimize the risk of bad debt, weโve added a parameter called the Minimum Debt Balance, which determines the minimum amount of $FLAT that can be borrowed and is another parameter not present in MIM.
By implementing a Minimum Debt Balance, we can ensure that the liquidator is always incentivized to liquidate underwater positions, as the liquidation incentive (which is a percentage of the outstanding debt value) will always be attractive to the liquidator and higher than the gas cost required to perform liquidation, thereby limiting the potential of bad debt.
Last modified 4mo ago