FAQ
Frequently asked questions about RAI and GEB
HAI is currently in testnet on Goerli Optimism. Testnet started on June 9th, 2023, and will likely run for 1.5-2 months. To participate in testnet, visit our website and join our Discord. Much of the information in these docs will be updated as we approach mainnet.
What is HAI?
HAI is a multi-collateral fork of RAI on Optimism. HAI uses something called a "floating-peg". This means that its price is not tied to a static price (e.g. $1).
Users can mint HAI by depositing different types of collateral into the system and minting HAI against them.
The price at which the system values HAI is called the Redemption Price. The Redemption Price is determined by a PI controller. Basically, when the market price of HAI goes above its peg, the controller sets a negative interest rate, and when it's below its peg, it does the opposite.
Compared to protocols that try to defend a fixed exchange rate between their native stable asset (pegged coin) and fiat (DAI/USD, sUSD/USD etc), HAI's monetary policy offers a couple of advantages:
Flexibility: the protocol can devalue or revalue HAI in response to changes in HAI's market price. This process transfers value between SAFE users and HAI holders and incentivizes both parties to bring the market price back to a target chosen by the protocol. The mechanism is similar to countries devaluing or revaluing their currencies in order to combat a trade imbalance. The "trade imbalance" in HAI's case happens between HAI and SAFE users
Discretion: the protocol itself is free to change the target exchange rate to its own advantage. It can attract or repel capital whenever it wants.
Are we HAI on Ethereum?
Yes, we’re HAI on Optimism, an Ethereum Layer 2.
Can the price of HAI going down affect SAFEs?
If the market price goes below the redemption price the rate becomes positive and your borrowing power shrinks as the value of your debt increases. When the market price of HAI goes up, the opposite happens.
How do I redeem HAI at the redemption price?
You only redeem at the redemption price in the case of a system settlement/global shutdown.
Why is there a gas fee to create a SAFE?
The first step (creating an account) creates a proxy account, which is a smart contract wallet owned by your account that holds your HAI SAFE. Creating a SAFE is necessary to mint HAI.
Why is there a minimum mint requirement when opening a SAFE and minting HAI?
SAFEs need to be a certain size in order for liquidations to be profitable, if liquidations aren't profitable then the system could potentially start accruing bad debt, and no one likes bad debt.
What causes the value of your debt to increase or decrease?
The redemption rate devalues (makes it cheaper and increases your C-ratio) or revalues (makes it more expensive and decreases your C-ratio) HAI based on the market price deviation from the redemption price. As the value of HAI increases or decreases, you owe the same number of HAI tokens but the value of those tokens (your debt) fluctuates.
How do the system surplus and treasury surplus work?
The stability fees are accrued in the treasury over time, when a threshold is reached a surplus auction will be triggered. These auctions buy and burn KITE from the market. The auctions take place on our website and are open to all.
What expenses does the stability fee cover?
Calls to the OSM, rateSetter, the HAI TWAP, and all automation contracts pay in HAI for callers.
After a vote concludes on Tally, when can I expect the proposal to execute?
Once a proposal is queued for execution, there is a 24-hour time-lock before the proposal can be executed. This is to limit the potential of governance attacks through malicious proposals.
Why does HAI have a higher TVL than the circulating supply would allow?
The TVL is the total amount of ETH locked in the system, not the minted HAI.
Since it’s free-floating, what is HAI referring to when it stabilizes?
HAI is not mean reverting. It's self-referential, so it's not seeking a particular price, it's just resisting market price movements. Instead of targeting a price, it looks at the difference between the market price and the internal redemption price, then sets a rate at which to change the redemption price to try to cancel out the difference.
How can I bid on surplus auctions?
You can bid on surplus auctions manually through the Reflexer App.
What is the reserve ratio or C-ratio for HAI SAFEs?
135% collateralization is needed to mint RAI.
The PID Controller
What controls the redemption rate?
The redemption rate is controlled by the PID controller and the PID controller parameters are controlled by the DAO. The goal is to eventually lock the parameters once we're confident in our testing.
What are the pRate and iRate?
The RAI controller is a PI controller. The pRate is the rate derived from proportionate error(current error) and the iRate is the rate calculated from the integral error(historical error). In a PI controller, the sum of these equals the final rate.
What is the time period for the iRate?
It accumulates 50% of the P-rate over 30 days, 100% after 60 days (maxes out at 100%), and resets back to 0 after ~90 days of equilibrium.
Is there a min/max devaluation/revaluation that can be set by the PID?
It's about 10x per year in either direction, max of 1000% and min of -90%.
Collateral Types
What collateral will HAI use?
HAI will launch on mainnet with ETH wstETH and OP as possible collateral.
Can we add more collateral types?
Yes! New collateral can be added via the governance process. To add a new collateral type, submit a proposal to the forum, and after collecting feedback, submit it on Tally.
How do you determine what collateral types you can add?
It is up to the DAO.
KITE
What is KITE?
The governance token for HAI. KITE is used to vote on matters such as what collateral types to add.
Can I vote with staked KITE?
No, you can only vote with unstaked KITE.
What is your reasoning behind your current governance parameters?
We chose the current governance parameters to be somewhat aggressive (faster) during the first phase of the DAO, in case we need to make changes more quickly. Over time, we will most likely slow down the proposal voting period and execution delay.