Under extreme conditions, the system's global asset adequacy ratio Qtotalmay drop below 100%. If the market continues to be sluggish, the liquidation arbitrage may not develop well due to the lack of intention to arbitrage. Now, the value of the reserve assets in the system is insufficient, hence overall debt will be generated. In order to maintain the intrinsic value of the QIAN system, the governance token FOR will be unlocked to make up the gap of the various reserve assets through auctions, so that the overall adequacy ratio will be brought back to the safety line and the intrinsic value of QIAN will be restored under extreme conditions.
The reason why auction participants are attracted is that the unlocked FOR will be auctioned at a price that is below the market price. The maximum discount Δr will be introduced to QIAN’s debt auction. The initial value of Δr is set to 70%, and this value will be modified by the community through voting after detailed discussions. The total amount of FOR in the debt auction is:
In the auction, the start price of FOR is
If the auction participantsuse asset i as the underlying asset for quotation and settlement, the final pricefalls in the following range:
i(start) ≤ i(final) ≤ i(market)
The asset i obtained from the auction will be used to pay the system debt. If there is any surplus, it will be locked in the auction surplus contract for future use.