I propose to stop defending the backing price and to randomize buy backs.
The backing price has been used as a psychological threshold for frogs to set their liq prices slightly under.
This is not a great strategy evidently as it can be picked off by malicious actors with large amounts of capital.
This also does not encourage responsible leverage management in frogs; they believe the backing price will hold. And if it doesn’t, the blame falls on Sifu.
Not fun for anyone
Using profits (or capital) to defend backing price is an attack vector on our treasury. It leaves our treasury vulnerable.
Malicious actors can design attack plans based on the fact they know Treasury will defend the backing price. If they wanted to drain our treasury over a long consolidated period of time, they’d be able to do so with a carefully calculated strategy.
Removing this attack vector will make it harder for malicious actors to predict when treasury will step in to buy.
Initiate buy backs on a randomized schedule at the discretion of treasury management in a manner that does not make buybacks predictable.
Look forward to all thoughts/comments/questions.