BUNNY FRE Mechanism (Mint or Buy-back?)

FRE Mechanism : Either “Mint” or “Buy-back”

FRE (Floating Rate Emission)

Let’s start with the FRE (Floating Rate Emission) definitions from PancakeBunny Gitbook itself. This mechanism has being used to dynamically utilize their 30% performance fee (from pools) to stabilize the BUNNY price by “minting” new BUNNY in “BUNNY bullish trend” OR “buying back” the BUNNY from the market in “BUNNY bearish trend”. Plus, it will keep minting additional BUNNY equal to 6% of the claim.

FRE Definition from Gitbook
  • Direct rewards (eg. LP or CAKE) = 70%
  • BUNNY tokens (from either minting or buying back) = 30%
  • BUNNY tokens (FRE based minting rate) = 6%

When will the FRE mechanism mint or buy-back?

It depends on 2 factors below:

  • FRE threshold setup in the Bunny Minter Contract (now, it is 40 BUNNY : 1 BNB)
  • The ratio of BNB Price / BUNNY Price
Buy back BUNNY when the BNB/BUNNY ratio >FRE Threshold (40 BUNNY : 1 BNB)
Mint BUNNY when the BNB/BUNNY ratio < FRE Threshold (40 BUNNY : 1 BNB)

What is the FRE mechanism doing right now?

As-of 21th August 2021 5:50 UTC, the 3 factors I mentioned are as follows:

  • FRE threshold = 40 BUNNY : 1 BNB
  • BUNNY price = 7.41 USD
  • BNB price =458.39
BUNNY Minter Contract as-of 21th Aug 2021 5:50 UTC, FRE Threshold = 1 BNB : 40 BUNNY & In “Market Buy” mode

My Thoughts

Since 19th August until now (21th August 6:30 UTC), there are 4 important events that occurred and will occur here:

  1. Buy-back” mode has been activated because the BNB/BUNNY price ratio is much greater than 40 (Now it is 61.86)
  2. Bunny Maxi Pool APR dropped from 300%APY to 115.80%APY due to the fact that the accumulated rewards in the BUNNY treasury was rebooted on 19th August (Due to compensation end) -> Related PancakeBunny article
BUNNY Maximizer Pool APY = 115.80 as-of 21th August 2021 6:50 UTC
Qubit Launch Date
QBT SAV Launch
  • BTC/ETH/BNB (Bullish trend)
  • QBT/BNB LP Pool (2000% APY)
  • QBT (Will launch on 24th August)
  • MND (Low price, high NAV)
  • polyBUNNY (APY > 500%)
  • The Higher PancakeBunny SAV APR
  • The more attractive BUNNY pools
  • The more TVL
  • The more performance fee
  • The more buying pressure from “FRE mechanism” & “investors”
  • The better BUNNY price
  1. Thank you for your contribution & hardworking to create the financial innovations for us, our Mound family. I do appreciate it.
  2. Provide an idea regarding “compromising the FRE mechanism”.
    Instead of choosing one way or another, can we perform both “buy-back” and “minting” at the same time with the dynamic percentage adjustment based on the BNB/BUNNY ratio vs FRE threshold. For example, if the BNB/BUNNY ratio is 60 while the FRE threshold is 40, instead of buying back using “ALL” collected performance fee. Can this be splitted to 2 portions; 70% for buying back and 30% for sending to Bunny Maxi pool stakers. And I truly believe your team already collected enough statistics and can model and tune this formula to destroy this vicious cycle.

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Tanate Sukonrattanamaetee

Tanate Sukonrattanamaetee

187 Followers

A Software engineer who loves reading and sharing any interesting and useful things