Editing Synthetix (section)

= Maintaining the stable coin =

In the previous section I explained that X worth of sUSD is more than X USD worth of SNX collateral. It’s equal to X + (X * Y) USD worth of SNX, where Y = 7.5 or 750% [issuance_ratio][issuance_ratio2].

The value of Y represents the ‘collateralization ratio’ between a spendable sUSD balance and how much extra SNX is required to hedge against price swings. You can see that 750% is a very inconvenient number (how useful is an investment platform that only lets investors leverage a pittance of their wealth?)

To ensure investors keep their sUSD balances well collateralized there is a function to flag accounts for violations, along with a penalty cost if their collateral isn’t increased above a threshold within a set timeframe. The full values can be found in the [SystemSettings.sol] settings contract.

One point to pay attention to is like most so-called ‘decentralized’ applications- almost every aspect of Synthetix Exchange can be changed by it’s owners, making it trivial to steal funds or destroy the exchange.

# [Liquidations.sol#L172] '''flagAccountForLiquidation(address account)'''
# [Synthetix.sol#L301] '''liquidateDelinquentAccount(address account, uint susdAmount)'''
# [Issuer.sol#L613] '''liquidateDelinquentAccount(address account, uint susdAmount, address liquidator)'''

Users can call '''calculateAmountToFixCollateral(uint debtBalance, uint collateral)''' [Liquidations.sol#L145] to obtain the amount in sUSD that needs to be paid to fix their collateral ratios should they fall under the required limits.

One of the most important pieces of code in Synthetix:

<pre class="solidity">    /**
     * r = target issuance ratio
     * D = debt balance
     * V = Collateral
     * P = liquidation penalty
     * Calculates amount of synths = (D - V * r) / (1 - (1 + P) * r)
     */
    function calculateAmountToFixCollateral(uint debtBalance, uint collateral) external view returns (uint) {
        uint ratio = getIssuanceRatio();
        uint unit = SafeDecimalMath.unit();

        uint dividend = debtBalance.sub(collateral.multiplyDecimal(ratio));
        uint divisor = unit.sub(unit.add(getLiquidationPenalty()).multiplyDecimal(ratio));

        return dividend.divideDecimal(divisor);
    }</pre>
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