pDAI & COLLATERAL - how it works - my understanding 🧵
- how much collateral is needed?
for the L2 model, you don’t need collateral equal to circulating supply, because there’s no 1:1 redemption line. instead you need just enough credible locked value to convince arb bots and traders they won’t get rugged. coverage ratio targets 150–250% of the active float that’s re-minted on L2, not the full dirty 44B supply. That’s why locking L1 float is essential (it shrinks the denominator)...which is what we are seeing built.
- where will the collateral come from?
> OA bags / founder assets: PLS, PLSX, HEX, other Pulse-native tokens
> ETH, WBTC, etc. that can be deposited cross-chain (depends on bridge trust...
@LibertySwapFi)
> validator staking returns, PulseLend lending pools, LP fees. These increase the collateral buffer over time
- how does it hold against millions/billions withdrawn at once if that were to occur?
users can’t line up at the vault and demand $1 collateral. that firehose doesn’t exist. they can only sell into pools. so, if a billion pDAI is dumped (i dont think that would happen):
1. it pushes price down on one chain.
2. arb bots buy discounted pDAI, route it cross-chain, and resell or lock it, earning the spread.
3. fees spike automatically (deviation fee curve), making further selling more costly.
4. treasury yield bot profits accumulate, reinforcing reserves.
collateral is never sold out to meet redemptions. It just sits locked, proving over-collateralization.