RAAC Stablecoin Minting System (fx fork)

Overview

The RAAC Stablecoin Minting System is a fork of the f(x) protocol designed to use RWA-backed tokens as collateral to mint stablecoins and leverage tokens. This system enables the creation of stablecoins backed by real-world assets like fractionalized gold (fGOLD) and RWA NFTs.

f(x) Protocol Reference

You can read the original f(x) documentation at: https://fxprotocol.gitbook.io/fx-docs/

Purpose

• Use RWA-backed tokens as collaterals (fGOLD, fRWA NFTs) to mint stablecoins (fToken) and leverage tokens (xToken)
• Enable fractionalized gold as collateral to mint goldUSD (stablecoin) and xGOLD (leverage token)
• Maintain stability through collateral ratio management and automated rebalancing
• Provide a permissioned system for authorized managers to maintain system stability

Core Components

Using f(x) Components

• f(x)/v1/* - Core f(x) protocol contracts
• f(x)/math/FxLowVolatilityMath.sol - Mathematical calculations for low volatility scenarios

Key Contracts

Contract	Purpose
\(\text{Treasury}\)	Core treasury management with RWA oracle integration
\(\text{Market}\)	Market operations (manager-only access)
\(\text{MintManager}\)	Asset management for authorized keepers
\(\text{FractionalToken}\)	fToken implementation with under-collateralized handling

Use Case Example

fGOLD Integration:

• fGOLD represents fractionalized gold
• Instruxi provides oracle function \(\text{RWACoordinator::getSharePrice}\) and \(\text{BaseToken}\) address
• System mints: goldUSD (fToken) and xGOLD (xToken)
• xGOLD absorbs volatility while goldUSD maintains stability

Example Scenario:

• fGOLD NAV: $3000
• goldUSD NAV: $1
• xGOLD NAV: $1
• Minted: $150 worth of gold → $100 goldUSD + $50 xGOLD
• Collateral Ratio = 1.5 = Stability Ratio

When gold value increases to $200:

• Collateral ratio becomes 2.0
• Manager mints more goldUSD without adding fGOLD to restore stability ratio

System Restrictions

Upgradeability

• All contracts must be upgradeable

Access Control

• All \(\text{Market}\) actions are manager-only
• Authorized Silo managers can interact with the system
• Managers are multi-sig with RAAC as necessary signatory
• Prevents unauthorized minting, especially \(\text{mintFTokenWithoutCollateral}\)

Fee Structure

• No fees and incentives (all related parameters disabled)
• No \(\text{reservePool}\) and \(\text{registry}\)
• No liquidations or self-liquidation mechanisms

Beta Configuration

• \(\text{Treasury.beta}\): 1 (stablecoin)
• \(\text{Treasury.(constructor)}\): 0.9 (initialRatio - $0.9 for each $1 collateral)
• Since beta = 0, fToken multiple is 0, ensuring fNAV = \(10^{18}\) always

System Parameters

Enabled Parameters

Parameter	Value	Description
\(\text{Treasury.beta}\)	1	Stablecoin configuration
\(\text{Treasury.initialRatio}\)	0.9	Initial collateral ratio
\(\text{Market.MarketConfig.stabilityRatio}\)	Variable	Target stability ratio
\(\text{fTokenMintInSystemStabilityModePaused}\)	true	Pauses fToken minting in stability mode
\(\text{xTokenRedeemInSystemStabilityModePaused}\)	true	Pauses xToken redemption in stability mode
\(\text{mintBothInSystemStabilityModePaused}\)	true	Pauses both token operations in stability mode

Constructor Parameters

For detailed constructor parameters, refer to \(\text{scripts/deploy_gold.ts}\)

Under-Collateralized System Handling

When the system becomes under-collateralized, the following mechanisms activate:

System State Changes

• xNAV = 0 - Negative xNAV is not allowed
• Equality \(n \cdot v = n_f \cdot v_f + n_x \cdot v_x\) no longer holds
• Blocked operations: \(\text{mint}\), \(\text{addBaseToken}\), \(\text{liquidation}\)
• Allowed operations: \(\text{redeem}\) for fToken (pro-rata redemption)

Pro-rata Redemption

If there are 100 baseToken and you have 200 fToken out of 1000 fToken supply:

• You are entitled to 20% of the baseToken (20 baseToken)

RAAC-Specific Actions

• \(\text{donateBaseToken}\) - Allows silos to provide collateral to stabilize the system
• Amount calculation: \(CR = \frac{(n + dn) \cdot v}{n_f \cdot v_f}\) to find required \(dn\)

fNAV Calculation

• Collateralized state: Returns 1 (if beta=0)
• Under-collateralized state: Returns \(\frac{n \cdot v}{n_f}\)
• Example: $20,000 collateral with 40,000 fToken → fNAV = $0.5

Key Modifications from f(x)

New Functions Added

Function	Purpose
\(\text{FxLowVolatilityMath::maxMintableFTokenWithoutBaseToken}\)	Calculate max fToken mintable without collateral
\(\text{FxLowVolatilityMath:maxBaseDonationForCollateralRatio}\)	Compute the amount of base token needed to reach the new collateral ratio.
\(\text{Treasury::mintFTokenWithoutBaseToken}\)	Mint fToken without base token
\(\text{Treasury::maxMintableFTokenWithoutBaseToken}\)	Get maximum mintable amount
\(\text{Treasury::maxBaseForCollateralRatio}\)	Get maximum base amount for target collateral ratio
\(\text{Market::mintFTokenWithoutBaseToken}\)	Market-level minting function
\(\text{Market::donateBaseToken}\)	Supply base token to the system to increase collateral

Oracle Integration

• Uses \(\text{Treasury::_fetchRWAOraclePrice}\) instead of \(\text{TWAPOracle}\)
• Simplified \(\text{_loadSwapState}\) without min/max parameters

Access Control

• Added \(\text{AccessControl}\) to all \(\text{Market}\) methods
• Ensured system works without \(\text{reservePool}\) and \(\text{registry}\)
• Disabled fee collection mechanisms

MintManager Contract

• Asset owners deposit assets (e.g., fGOLD)
• Authorized keepers can run market methods
• Automated rebalancing through bot operators

Mathematical Foundation (Optional)

Core Invariant

\[n \cdot v = n_f \cdot v_f + n_x \cdot v_x\]

Where:

• \(n\) = number of base tokens (fGOLD)
• \(v\) = NAV of base asset (gold price)
• \(n_f\) = number of stable assets (goldUSD)
• \(v_f\) = NAV of stable asset
• \(n_x\) = number of leveraged assets (xGOLD)
• \(v_x\) = NAV of leveraged asset

Collateral Ratio

\[\text{Collateral Ratio} = \frac{\text{Base Asset Value}}{\text{Stable Asset Value}}\]

Example:

• $150 fGOLD → $100 goldUSD + $50 xGOLD
• Collateral Ratio = \(\frac{150}{100} = 1.5\)

Price Impact Scenarios

Gold Price Increase:

• fGOLD NAV: $6000
• Position: $300 fGOLD → $100 goldUSD + $200 xGOLD
• Collateral Ratio = \(\frac{300}{100} = 3.0\) (safer)

Gold Price Decrease:

• fGOLD NAV: $1500
• Position: $75 fGOLD → $100 goldUSD - $25 xGOLD
• Collateral Ratio = \(\frac{75}{100} = 0.75\) (undercollateralized)

MaxMintableFToken Formula

The formula calculates how much fToken can be minted to reduce collateral ratio:

\[\begin{align} (n + dn) \cdot v &= (n_f + df) \cdot v_f + n_x \cdot v_x \\ \frac{(n + dn) \cdot v}{(n_f + df) \cdot v_f} &= ncr \text{ (new collateral ratio)} \end{align}\]

Solving for \(df\) (fToken to mint):

\[df = \frac{n \cdot v - ncr \cdot n_f \cdot v_f}{(ncr - 1) \cdot v_f}\]

Leverage Ratio Formula

function leverageRatio(
  SwapState memory state,
  uint256 beta,
  int256 earningRatio
) internal pure returns (uint256 ratio) {
  uint256 rho = state.fSupply.mul(state.fNav).mul(PRECISION).div(state.baseSupply.mul(state.baseNav));
  uint256 x = rho.mul(beta).mul(uint256(PRECISION_I256 + earningRatio)).div(PRECISION * PRECISION);
  ratio = PRECISION.sub(x).mul(PRECISION).div(PRECISION - rho);
  if (ratio > MAX_LEVERAGE_RATIO) ratio = MAX_LEVERAGE_RATIO;
}

Formula Breakdown

• \(\rho\) = fAsset value / base asset value
• \(\beta\) = fAsset sensitivity to base asset price changes
• \(r\) = earning ratio (percentage price change)

Beta = 0 Scenario (Stablecoin)

When \(\beta = 0\) (goldUSD has no sensitivity to fGOLD price):

• fAssets don't absorb base asset movements
• All volatility flows to xAssets
• Leverage ratio = \(\frac{1}{1 - \rho}\)

Known Issues

Treasury.mintFTokenWithoutBaseToken Issue

Problem: The function calculates max mintable fToken for the entire treasury, not individual positions.

Example:

1. User 1: 500 fGOLD → 400 goldUSD + 100 xGOLD
2. User 2: 300 fGOLD → 240 goldUSD + 60 xGOLD
3. Treasury: 800 fGOLD × $10 = $8000 base value, 640 goldUSD × $1 = $640 fAsset value
4. Collateral ratio: \(\frac{8000}{640} = 12.5\)

If User 2 calls \(\text{mintFTokenWithoutBaseToken}\) with target ratio = 5:

• Max mintable = \(\frac{8000}{5} = 1600\)
• Available to mint = \(1600 - 640 = 960\) goldUSD
• User 2 gets 960 goldUSD but only supplied $300 fGOLD

Mitigation: Multi-sig managers with RAAC oversight monitor all operations to prevent lopsided positions.

System Invariants

1. Access Control: All external state-changing functions in \(\text{Market.sol}\) must be gated to \(\text{onlyManager}\)
2. Total Balance: \(\text{totalBaseToken}\) must always equal the amount of base assets in the system
3. Stability: fToken value never changes unless user mints more fTokens (assuming stable asset)