DEX AMO Deployment

The DEX AMO operates by maintaining a small portion of the total funds (10%) under its control idle, to ensure efficiency and readiness for OADA buybacks to maintain the peg. This allocation percentage will be periodically reviewed to ensure optimal efficiency.

In scenarios where the AMO controls 0 ADA, such as during the initial deployment of the epoch, a purchase of OADA is made to bring the price up to 0.999 ADA per OADA. The amount of capital required for this purchase is pre-calculated during the distribution among strategies. This purchase ensures a safe deployment of ADA paired with minted OADA in the exact ratio as the DEX pool.

Assuming swap fees are 0.1% per swap or higher, depositing minted OADA in this ratio to ADA deposited ensures that the backing remains 1:1. This is because any ADA entering a swap will not cause a loss of OADA acquired for less than 1 ADA unless someone sells it for less than 1 ADA first, which naturally balances the system. This mechanism helps maintain the peg and ensures that the system operates efficiently and securely.

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