DAO/Emergency reserve fund

brian620220 · 4 September 2021 13:51

What is the purpose and difference of the DAO/Emergency reserve fund?

AwaxJago · 4 September 2021 17:42

This is from the BALN reward adjustment thread:

ERF:

For what it’s worth, here is how you find the values of these funds:

Emergency Reserve

DAO Fund

Look at “getBalanced”, then use this hex-to-decimal converter, then divide the output by 10^18th and that’s how much is in there of each asset.

Now as for if it’s over-stocked, here is the use-case of the fund from the white paper:

“In extreme circumstances where the value of bad debt of a particular pegged asset is greater than the value of the forced liquidation pool, an emergency reserve fund will be made available for outside traders to be compensated for paying off bad debt. 5% of Balance Tokens mined on a daily basis are sent to the emergency reserve fund, along with leftover collateral from liquidations.”

In practice, this would happen if there was a 34% drop in ICX price just after somebody was liquidated and before somebody paid off their paid debt using bnUSD. I personally agree that this edge case doesn’t need 5% of the network to prepare for. The more I think about it, we can essentially think of the Emergency Reserve Fund as part of the DAO Fund. There needs to always be some money there in case of the aforementioned scenario, but we can always move money there from the DAO Fund if we find it to be necessary.

DAO fund is for us to use. I imagine mostly to support and grow Balanced.

brian620220 · 4 September 2021 19:12

Thanks, I really appreciate that.