Flash Mint
Last updated
Last updated
Flash Minting is an important function of the Alto Protocol and the USDO stablecoin as it enables efficient USDO price peg arbitrage between markets and liquidations.
Flash Minting provides the same functionality as the current and can be used in the same way flash loans are regularly used for arbitrage and liquidations in the broader DeFi ecosystem, with one key difference; the lender of the liquidity is effectively the Alto protocol.
Flash Minting allows users to access up to a governance defined ceiling of liquidity from the Alto Protocol, as long as the flash mint debt ceiling is not exceeded and the borrowed amount plus the fee is returned within the same block.
The Alto Protocol flash minting module is different from a flash loan due to the fact that USDO is directly minted during the flash-loan transaction and burnt at the end of it. This means that the size of the flash mint is not capped by an amount of liquidity in a pool but rather by a parameter chosen by governance. The Alto Protocol’s Flash Mint Module is based on Maker's.
USDO flash mints have a 1 bps. This fee is modifiable by governance instruction.
Governance parameters exist to define the maximum amount of USDO that may be flash minted. The current maximum is 100,000 USDO.