Stack PSM + AMO and Insurance Fund

Stack PSM + AMO

The Stack PSM "Peg Stability Module" and AMO “Algorithmic Market Operations Controller” are contracts that implement various functionality and monetary policies intended to maintain more $MORE price stability.

The PSM introduces the ability to mint and redeem $MORE for $USDC.

This AMO is allowed to conduct open market operations in an algorithmic manner to support $MORE price stability.

PSM Mechanism:

When $MORE price is ABOVE $1.00

Users can use the PSM to mint $MORE for free 1:1 with $USDC. Redemptions are not enabled when price is above $1.00 to encourage users to swap to sell $MORE to lower the price.

When $MORE price is BELOW $0.997

Users can use the PSM to redeem $MORE for $USDC 1:1 for a 0.3%. Minting is not enabled when price is below $1.00, users should be encouraged to swap to buy $MORE to raise the price.

AMO

100% of $USDC in the PSM should be deployed into an AMO on Pearl, specifically the MORE-USDC stable-swap pool. The goal of the AMO is to keep the $MORE price at perfect peg and interest rates optimal. Profits from the AMO operations will remain with the AMO, increasing its size over time.

The AMO LP positions are staked in the gauge, farmed rewards are sent to the Pearl Team multisig once per day.

When $MORE price is ABOVE $1.01

The AMO will mint and sell $MORE for $USDC directly into the LP pool when the price is above 1.01. This $USDC is kept as profit for the AMO to be used in future operations.

When $MORE price is BELOW $0.999

When the price is beneath $0.999, the AMO will remove liquidity, take $USDC from the liquidity pairing and use it to buy $MORE to reestablish peg. Remaining $USDC is paired with $MORE and liquidity is resupplied and staked. Any remaining $MORE held by the AMO is then burned.

Insurance Fund

As noted in liquidations, 50% of the liquidation fee is kept by the protocol and distributed to the insurance fund.

The insurance fund is a 4/5 multisig operated by the team. It's role is to serve as a rainy day fund that can bail out the protocol in the event of a liquidity crisis.

During a significant $MORE depegging, these assets will be used to buy and burn after the move. This would be a highly profitable trade for the insurance fund, while also getting greater $MORE protection per dollar invested in the insurance fund.