Stability Mode

In the majority of circumstances where the CR falls below 130, the continuous and smooth upward pressure of the User Stability Pool will easily restore it, thereby maintaining system stability. The mechanism only runs into problems if the downward pressure on the CR is persistent or extreme enough to exhaust the Stability Pool’s supply of fETH. In this edge case, the protocol has two stabilization mechanisms executed automatically using accrued revenue from the protocol treasury. Each of these mechanisms is governed by on-chain parameters. Neither mechanism is engaged unless the Stability Pool supply of fETH has been completely exhausted. Those mechanisms are:

1. xETH Minting Incentives: For xETH minting incentives, earned revenue from the treasury is used to fund a temporary xETH minting bonus. The relevant parameters for this mechanism are the bonus size and maximum CR limit.

2. fETH Redeeming Incentives: For fETH redeeming incentives, earned revenue from the treasury is used to fund a temporary fETH redeeming bonus. The relevant parameters for this mechanism are the bonus size and maximum CR limit.