From 63bdb51a362c9028b1db111e74104ced07bf352d Mon Sep 17 00:00:00 2001 From: Taylor Brent Date: Wed, 24 Jul 2024 16:31:02 -0700 Subject: [PATCH] update backing buffer description --- docs/deployment-variables.md | 10 ++++++++-- 1 file changed, 8 insertions(+), 2 deletions(-) diff --git a/docs/deployment-variables.md b/docs/deployment-variables.md index eeef1d6c15..83ccba188f 100644 --- a/docs/deployment-variables.md +++ b/docs/deployment-variables.md @@ -102,10 +102,16 @@ Reasonable range: 100 to 3600 Dimension: `{1}` -The backing buffer is a percentage value that describes how much overcollateralization to hold in the form of RToken. This buffer allows collateral tokens to be converted into RToken, which is a more efficient form of revenue production than trading each individual collateral for the desired RToken, and also adds a small buffer that can prevent RSR from being seized when there are small losses due to slippage during rebalancing. +The backing buffer is a percentage value that describes how much extra collateral to hold in the BackingManager. This can be important for preventing RSR seizure during normal rebalancing as a result of trading slippage. + +However, too large a backing buffer (as a function of the blended collateral yield) can cause RToken and RSR staker yields to become too sensitive to supply changes; new issuance creates a hole that must be filled in before revenue handout can resume, while new redemptions cause the excess capital to be immediately realized as revenue. + +If the backing buffer is set too low, it's possible to get into a situation where RSR stakers begin individually unstaking before rebalancing proposals in order to avoid being slashed. The backing buffer should be high enough to prevent this outcome for expected rebalances. + +It is not important to consider the backing buffer for _default_ scenarios, only governance-led rebalances. Default value: `1e15` = 0.1% -Reasonable range: 1e12 to 1e18 +Reasonable range: 1e13 to 1e17 ### `maxTradeSlippage`