F-asset system | Agents
The minting of F-assets involves several parties and mechanisms to ensure that the F-asset system can maintain its reliability and unreliable nature. Agents are more likely to be institutional entities at the beginning of the F-asset system due to the higher risk/reward offer that requires agents to place collateral in the FLR to mint F-assets. This is not to say that retail investors cannot act as agents from the outset, but it will require a certain level of technical and financial training. Agents will have to absorb volatility shocks in the cryptocurrency markets, as well as effectively manage their capital to justify this risk. In addition, agents must make repayments on demand,
Multiple agents will support any F-Asset position to diversify the risk of default at the appropriate collateral ratio. The F-Asset system will automatically match senders with agents and protect senders from agent risk by default. The first of these protection mechanisms is that when an agent falls below the required collateral ratio within a given period of time set by the management, the smart contracts of the F-Asset system begin to buy F-assets on the open market in order to either close the agent’s position. or reduce it until they return to the proper collateral ratio. Agents can take proactive measures to avoid the scope of the collateral call, either by increasing the amount of collateral they have in the system or by closing their position with the underlying assets they hold. Consequently, the underlying assets that agents hold for creators minting F-assets act as a hedging mechanism for agents to stay afloat in their positions during bad market conditions. Agents can mint new F-assets with the underlying assets they hold to close their accounts immediately. This moves the repayment requirement to other agents with healthy accounts.
Of course, the agent needs to manage many aspects. Their value proposition includes the ability to receive FTSO rewards from their FLR collateral, a fee for minting underlying assets, and income from underlying assets they hold for redemption. The nature of underlying assets not tied to their own chain ensures the efficiency of capital for participants in the F-Asset system, as well as proper hedging mechanisms for agents.
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