V2 SNX Debt Mirror
Pool Name | SNX Debt Mirror Pool |
Symbol | dSNX |
Polygon dSNX token | |
Fee | No fee currently, but will have a 2% annual streaming fee in the future |
Enabled Assets
USDC (deposit)
LINK
WETH
WBTC
Aave Lend/Borrow
Debt Mirror Index
The Debt Mirror Pool token is a tool that replicates the payoff of the Synthetix Debt Pool, enabling users to hedge their Active Debt exposure. 1 sUSD worth of Debt Mirror pool token hedges 1 USD worth of active debt.
Strategy
This pool mirrors the Synthetix debt distribution: https://stats.synthetix.io/. All Synthetix currency positions (sUSD, sEUR, sJPY, etc.) are combined into one position and mirrored by a USDC position in the pool.
Currently, the pool holds WETH for sETH, WBTC for sBTC and LINK for sLINK. Positions with less than 1% are not considered.
Net short positions of the debt distribution like sETH mirrored through borrowing.
Specification
Every fixed time interval the bot checks the SNX debt distribution (target allocation): It reads the total supply from different Synthetix assets, calculates the USD value and percentage of the total supply of all assets. ETH locked in the EtherWrapper contract are deducted from the sETH supply, which currently results in a net short position of sETH.
Currently, the pool holds USDC and WBTC as deposits on Aave, LINK as a normal asset position, and WETH as a debt position on Aave.
The bot calculate the percentages of current long/short positions, taking into account the deposited/borrowed assets on Aave and assets outside of Aave (current allocation) The bot compares current and target allocation and rebalances if the difference exceeds a defined threshold (currently set to 2%).
Rebalancing always occurs between an asset and USDC.
There are three types of rebalancing:
Rebalancing of asset outside of Aave (e.g. LINK):
Decrease allocation:
Trade asset into USDC on 1Inch
Deposit USDC into Aave
Increase allocation:
Withdraw USDC from Aave
Trade USDC into asset on 1Inch
Rebalancing of deposit asset (e.g. WBTC):
Decrease allocation:
Withdraw asset from Aave
Trade asset into USDC on 1Inch
Deposit USDC into Aave
Increase allocation:
Withdraw USDC from Aave
Trade USDC into asset on 1Inch
Deposit asset into Aave
Rebalancing of borrowed (short) asset (e.g. WETH):
Decrease allocation:
Withdraw USDC from Aave
Trade USDC into asset on 1Inch
Repay borrowed asset on Aave
Increase allocation:
Borrow more of the asset on Aave Trade asset into USDC Deposit USDC into Aave
The rebalancing of short assets could impact the allocation of the long assets, because it is converted into USDC (USDC allocation increases/decreases). As the other rebalancing jobs would correct that, the “Rebalancing of short assets” job should run first of the sequence.
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