Soft cap for outstanding kits

[murbard]

Robocoins often ship with a hardcoded limit for their supply, which is progressively relaxed as stakeholders grow increasingly comfortable with the security and stability of the system. Unfortunately, if and when they hit this limit, there is no mechanism to prevent the robocoin from shooting past is peg as the supply cannot increase.

It turns out Checker can handle a soft-cap very gracefully. The solution is to replace the outstanding supply in the imbalance calculation with the max of the outstanding supply and some soft-cap.

If and when the outstanding supply goes over this limit, the imbalance fee will increase, which will in turn have the effect of pushing the drift lower, making it increasingly unattractive to hold kit as the supply grows larger.

It's also a single line of code change :-)

Although given this use case,

1. it might be better to have the imbalance adjustment saturate at, say 15%, instead of 5%
2. one would probably want some admin entrypoint that lets a designated contract (e.g. multisig) increase the soft cap

[purcell]

Interesting!

[murbard]

To be sure, I'm not 100% sure this works. It seems on the face of it that it might break an invariant that if no one is getting richer out of this restriction no one should be getting poorer, so where does the disincentive come from? But it's not clear if that invariant is real or not.

[purcell]

Agree, requires a little thought.

[purcell]

Do you feel that we will need a soft cap for initial release?

[murbard]

Need is a strong word, but if the analysis holds up, it's definitely worth having that extra line of code.

My current thinking is that the mechanism essentially forces an increase in the collateralisation ratio which is costly for everyone involved.

[purcell]

Yeah, that does make sense.