Solido Cash
  • Introduction
  • Solido Cash
    • Product Guide
    • General
    • Troves and Collateral
    • Redemptions
    • Fee Model
    • Stability Vault & Liquidations
    • System Status & Price Volatility
  • Audit Report by MoveBit
  • Information
    • Brand Kit
    • Contracts
    • Website
    • Medium
    • X
    • Discord
  • DISCLAIMERS
    • Risks
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  1. Solido Cash

System Status & Price Volatility

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Last updated 7 days ago

System Status in Solido Protocol

Solido Protocol provides a System Status indicator on the front end, helping users monitor the health of the system based on the current Loan-to-Value (LTV) ratio of each collateral type.

  • Normal: Displayed when the collateral’s LTV is within a safe and healthy range.

  • Caution: This appears when a specific collateral type’s LTV is nearing the Maximum System LTV, signaling potential risk.

While Solido uses a shared Stability Vault, each collateral type has its own System Status, ensuring better risk management and transparency for users.

How is the Price of $CASH Determined?

The price of $CASH is designed to stay close to its peg in decentralized markets, but it can fluctuate within a certain range. While the system helps stabilize its value, $CASH is not immune to price movements, so users should always be cautious and fully informed when using the Solido Protocol.

$CASH is considered a volatility-dampened token, meaning its price remains more stable than regular cryptocurrencies. This stability is maintained through several built-in mechanisms, ensuring a reliable and predictable value over time. This occurs through a combination of the methods described below.

Hard Peg

The capacity to redeem $CASH for collateral within Solido Troves and mint $CASH at a 59% LTV against $SUPRA generates a price floor and ceiling, respectively, via arbitrage opportunities. We term these "hard peg mechanisms" since they rely on direct operations. This gives the user a wider margin of error to prevent redemption. More crucially, it prevents $CASH from being over-pegged frequently, making its implementation in other protocols less appealing over time.

Soft Peg

$CASH also benefits from less direct procedures, known as "soft peg mechanisms." As the price of $CASH fluctuates below and above $1 USD, possibilities emerge for both borrowers and depositors.

One of these methods is parity as a Schelling point. Because of its nature, actions made by users interacting with Solido Protocol's Smart Contracts will always be valued as 1 $CASH worth $1 USD. Parity between the two implies (but does not ensure) the protocol's equilibrium state.