A description of Ring USD and how it interacts with incentive contracts
RUSD (Ring USD) is designed to allow for flexible upgrades and arbitrary incentive mechanisms to support the $1 peg target.
Its issuance is controlled by the Minter💰role, and any contract with this role can mint RUSD to any address. The Burner🔥 role can burn RUSD from any address, and is utilized for deflation and disincentives.
Critically, RUSD can be over- or under-collateralized depending on volatility on the PCV and other market conditions.
The collateralization ratio of RUSD at any time is calculated as follows, with the denominator being "User controlled RUSD":
Collateralization ratio of Ring Protocol
The formula ignores "Protocol controlled RUSD" because any RUSD that the protocol holds will never be sold for PCV, only burned. Protocol controlled RUSD can have second-order, short-term inflationary effects. For instance, RUSD deposited into a lending market by Ring Protocol could increase the circulating supply when borrowed. The interest accrued and eventual withdrawal of that RUSD ultimately have a net deflationary effect in the long term.