Grindstone AMO
Mellow Algorithmic Market Operator
The Grindstone AMO (Algorithmic Market Operator) is a tool that utilizes the potential front-stop accumulation in the Interswap. For each mAsset, the front-stop can be deployed to the Grindstone once it is large enough. This deployment causes the collateral to be put into the relevant Ellipsis liquidity pool. This has the following effects:
The initial deposit serves in stabilizing the pool, raising the price of the mAsset.
The deposit earns yield in the form of EPX, which can be sold to cover protocol expenses, kept and locked to vote for increased incentives to the pools, or sold to accelerate Mellow depositors' debt repayment.
The AMO has the ability to withdraw the mAsset (instead of the underlying collateral) at any time, which essentially mimics the Interswap effect of changing the mUSD into collateral assets and pushing up the value of the mAsset an once more.
The Grindstone allows for quicker pricing control of mAssets as well as an extra source of income for the DAO, all while being able to match the Interswap by reducing the supply of mAssets as needed.
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