Trading Synths
Price Feed
Supply Target Adjustment
If the value of the circulating supply of a synth exceeds the amount of collateral backing them, we apply a supply target adjustment. This is effectively a fee that ensures that the market will only allow debt to be issued when it's fully backed. This fee is caluclated using the following formula:
1 - supplyTarget/circulatingSupply
This will cause undercollateralized synths to drift from it's peg, incentivizing arbitrage...