Hello! I haven’t seen arbitrage being offered as a solution to keep the mAsset peg on track.
Tell me why this would not work:
- If mAsset price > oracle price, there is a premium
Oracle price is 1$, mAsset price is 1,01$, so 1% premium:
Lock UST, get 100% of UST value minted as mAsset in oracle price and sold to market, everything in 1 transaction. Keep the profit and help the peg.
- If mAsset price < oracle price, so far not so likely situation
Buy mAsset at 0,99$ while oracle price is 1$ a share, and swap it at protocol arbitrage contract for MIR, keep the discounted MIR or sell to market and keep the profit. This would bring some dynamics for MIR supply but its not a bad thing, right if it is done for better peg.
All this could be automated ofcourse and you could park your UST to arbitrage contract and enjoy the compounding interest.