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Coupon Subsystem

When the price of VSD < $1.0, the system will move to contraction stage and issue debt to attract users to reduce the supply of VSD. The user can buy the debt as a coupon at a discounted price, and the coupon holder will have the right to redeem the coupon for future expansion reward. The coupon subsystem of VSD is inspired from ESD's coupon design with the following major enhancements

The coupons are automatically redeemed ordered by their expiration time;

Users can extend the expiration of coupon by burning VSD.

Automatic Coupon Redemption

When the system enters into expansion stage, the expansion reward will be used to redeem the outstanding coupons before being distributed to bonded LPs. If multiple users have multiple coupons, the order of the redemption will be based on their expiration time, where the coupon with closer expiration time will be redeemed first.

Coupon Extension

When a coupon is close to expire, a coupon holder may voluntarily extend the expiration of the coupon by burning VSD. The holder can choose to extend the whole coupon or just part of it. Further, the holder can choose how long the coupon will be extended, with longer time with more VSD.

The equation of coupon extension is based on *liveness* of a coupon, which is defined as

β

$liveness = couponAmount \times timeToExpire$

βFor example, suppose current epoch is 5, a 100 coupon expired at epoch 7 will have liveness as

β

$liveness = 100 \times (7 - 5) = 200$

βA user can extend the coupon by increasing the liveness of the coupon as

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$newLiveness = oldLiveness + vsdAmount \times defaultCouponExpiration$

βand thus the time-to-expire (in term of epochs) of the coupon is

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$timeToExpire = \mathrm{floor}(newLiveness / couponAmount)$

ββ

$newLiveness = 200 + 30 \times 10 = 500$

As a result, the time-to-expire of the coupon becomes

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$500 / 100 = 5$

βwhich means the extended coupon will be expired at epoch 10.

Last modified 8mo ago

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