Long or Short Correlated Synthetic Economies
The first sEconomy is USGDP - more will be introduced down the line.
Taking the same principle workings behind eTY and eITY products, you can mint synthetic and short synthetic economies. You no longer need to position an investment on a single or collective series of events through the use of these products. Instead, you can invest through a thesis of economic growth or regression - rather than the influences of said growth/regression on singular or basket-type assets. Mints of said assets require ISA and are charged a 2.5% mint fee. A maximum of 500k units of each experimental synthetic economies can be minted per quarter to ensure stability while we further develop this principle. As Rho evolves, synthetic economies will play a role in its growth through additional fusion backings. We have chosen the following initial economies to represent a dynamic range of stability and growth characteristics.
- Brazil GDP - BRGDP
- Singapore GDP - SGGDP
- United States GDP - USGDP
Beyond reflecting the current quarterly GDP, our synthetic economies will cross-reference over 1,000 data points collected across the prominent market of the county represented to reflect estimated market sentiments and the total influx of pricing volumes. These values are calculated using value-range supervised machine learning algorithms on a trailing monthly basis and more isolated trailing weekly data.
Each position will initially cost 100 USD worth of ISA and will scale with GDP growth. For example, if there is a 6% realized growth, each unit will cost 106 USD worth of ISA. Once purchased, the synthetic economy will automatically be entered into a lending pool to allow for short-selling. In return, you will receive an sEconomy token, a receipt of your transaction, of the asset which you can bond and sell to the treasury.
Like options, establishing a short position against this asset requires collateral. This collateral is set at a rate of 1.25 times the current unit cost - which will be backed by sRHO. Short-sellers will also pay interest to the pooled long synthetic economies at a daily interest rate of 0.05% per day - which will be paid for in sRHO. This daily interest will be calculated at the time of establishing the short by entering the maximum number of days you will be short for. Once the time limit is up - the short contract will expire and the short closed. If the synthetic economy is below the price when the short was initiated, the aggregated long pool of the economy asset will pay the unit count worth of profit to the now closed short holder. The time interest the short paid to the collected pool of longs will then be distributed to the longs proportional to their positional unit count. However, the interest will only be paid to the long holders that were in the pool at the time the short was established.