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When a user converts between any of the Haven assets it uses a 3rd party oracle to provide the price feed into the network. For XHV <> xUSD conversions, there are two different prices that a Haven user may encounter and these will be explained below:
Spot Price– This is the live price of XHV seen across multiple exchanges and is likely to be volatile with many swings both up and down.
Moving Average Price– This is the spot price averaged out over the previous 720 blocks (approx 24 hours) and is used to smooth out price fluctuations and reduce attempts at price manipulation.
As of the introduction of Haven v2.2.0 (February 2022), there is a new method for determining the conversion rate a user gets when going between XHV and xUSD.
In previous versions the conversion price given was simply the MA (Moving Average), but this effectively gave users a view of the future and an advantage at the expense of XHV holders when converting.
We have removed this advantage by giving users the following conversion rates depending on market conditions and the direction of the conversion.
|Conversion Type||Spot vs MA price||Conversion Rate Used|
|XHV to xUSD||Spot above MA||MA|
|XHV to xUSD||Spot below MA||Spot|
|xUSD to XHV||Spot above MA||Spot|
|xUSD to XHV||Spot below MA||MA|
To further explain how this works we can use this simple example below:
|Conversion Type||Spot Price||MA Price||Conversion Rate Used|
|XHV to xUSD||$4.00||$3.00||$3.00|
|XHV to xUSD||$3.00||$4.00||$3.00|
|xUSD to XHV||$4.00||$3.00||$4.00|
|xUSD to XHV||$3.00||$4.00||$4.00|
Put simply, the following applies:
- Going Offshore (XHV to xUSD) you get the lower of the spot or MA price
- Going Onshore (xUSD to XHV) you get the higher of the spot or MA price
Addendum (Nov 2022)
With the imminent release of Haven 3.0, users will be required to put up a certain amount of collateral (in the form of XHV) when converting between XHV and xUSD. This is done in order to protect the protocol and to avoid excessive inflation. The amount of collateral required will be determined by the VBS (Vault Backed Shoring), a value that is calculated using the price of XHV, the current circulating supply, the total xAssets market cap and the amount being shored.
The price of XHV, used for the calculation of VBS, will be derived in the same manner as outlined above, thereby removing the MA advantage that existed before Haven 2.2.0 and therefore protecting the system from being manipulated or inflated.
You can find out more about VBS and the full proposal for Haven 3.0 here.