Pegging

Sweep protocol adjusts supply to bring the AMM price of SWEEP to the target price.

AMM Configuration

Sweep Protocol funds a liquidity provider asset that can mint enough SWEEP to bootstrap an AMM. The Uniswap V3 version of this asset will place balanced liquidity near the target price.

Supply adjustments

If price > target_price

Sweep runs a Marketmaker asset that will mint and sell SWEEP when price > target_price + a small spread. This protects borrowers from escalation in the SWEEP price.

The Marketmaker will immediately place the USDx that it acquires back into the AMM for sale at target_price.

If price < target_price

Minting is disabled when price < target_price

Borrowing (supplying) of new SWEEP is disabled when the price is less than the target price.

Balancer reduces SWEEP loan limits and calls loans

Sweep protocol actively adjusts the supply of SWEEP by changing loan limits. Sweep uses a Balancer contract to adjust loan limits. The logic on the Balancer contract will be optimized and automated.

When SWEEP price < target price, the Balancer can force repayment by calling Stabilizer loans. According to the Sweep code and off-chain agreements, the protocol has the right to demand repayment, with delays of between 0 and 6 days. Some DeFi assets will automatically return money in real time.

Forced repayment is a strong tool for bringing the market price back up to the target price within 7 days. This reduces risk for savers. When borrowers repay, they must buy back SWEEP, reducing the supply and pushing up the price.

USD pricing

SWEEP holders want a USD-pegged asset that is not dependent on the correct pegging of stablecoins like USDC and USDT. Sweep Protocol attempts to deliver USD pricing. The Marketmaker, Balancer, and interest rate adjustments use oracles that adjust the AMM price of USDC-style stablecoins to a USD price.