Auto-exchange mechanism

When one of the auto-excange conditions is breached, the system will forcefully convert other tokens into T by relying in external ‘auto-exchangers’ who receive a discount over market price as incentive. The amounts available will take into account both the amounts in the T-bubble, as well as those that can be moved from other bubbles.

The amount of collateral mm of token SS the auto-exchanger receives in exchange is computed as

(1discountS/T)XS/T×m=n(1-\mathrm{discount}_{S/T})X_{S/T}\times m=n

where both discountS/T\mathrm{discount}_{S/T} and XS/TX_{S/T} will generally be a compound term, computed as products/quotients of the official pool discounts and exchange rates (one needs to trace the S→T path on the directed graph).

The following diagram illustrates the general flow.

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