Maths for position safety

This section explains how the Fathom's FXD stablecoin position's safety is calculated.

For a position to be considered safe, below should hold true.

lockedCollateralAmountPriceWithSafetyMargin>DebtSharedebtAccumulateRate,lockedCollateralAmount * PriceWithSafetyMargin > DebtShare * debtAccumulateRate,


PriceWithSafetyMargin=RawPriceLTVPrice WithSafetyMargin = RawPrice * LTV

When RawPrice is the price of collateral from PriceFeed and LTV is Loan To Ratio.

In other words

lockedCollateralVaule>debtVaultlockedCollateralVaule > debtVault
debtVault=debtSharedebtAccumulateRatedebtVault = debtShare * debtAccumulateRate

And debtAccumulatedRate is calculated as

debtAccumulatedRate=(1+interestRate)1/31,536,000debtAccumulatedRate = (1 + interestRate)^{1 / 31,536,000}

since debtAccumulatedRate is a second pounding interestRate.

Position safety calculation model

Please refer to below position safety calculation model.

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