Fantom network token rises 40% amid rumors of Andre Cronje’s return

On May 20, Andre Cronje proposed changes to the sFTM and fUSD liquidation model, as well as introducing limits on asset issuance in the Fantom network. Amid rumors of the return of the leading DeFi developer, the native token FTM rose by almost 40%.

New FIP out!

Read on to learn about proposed changes to sFTM and fUSD.

Addressing:
— liquidations
— how to repay outstanding debt
— LTVs and minting limits

We welcome everyone to leave comments on Github.

🧵https://t.co/3wV6Q7jJFg

— Fantom Foundation (@FantomFDN) May 20, 2022

The proposed Cronje changes concern the FMint platform, which allows issuing synthetic assets on the Fantom network and the issuance of stablecoin fUSD. The latter, in the wake of Terra’s collapse and the crypto market downturn in May, lost parity with the US dollar.

After the incident, the Fantom Foundation said that fUSD uses a peg model different from Terra’s UST.

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• If the value of the FTM goes below the minimum collateral ratio, then the FTM is progressively auctioned off to users who bid using fUSD (to keep peg). UST had no auctioning process.

An in-depth blog post detailing how fUSD functions will be released over the coming weeks

— Fantom Foundation (@FantomFDN) May 18, 2022

“fUSD — an overcollateralisation stablecoin (like DAI), backed by FTM tokens in staking. UST was not backed by anything. Users create fUSD by borrowing assets collateralised by FTM in staking. If the price of FTM falls below the minimum collateral ratio, assets are progressively sold at auction to users for fUSD. In UST this process is not used,” the developers wrote.

Despite a DAI-like model, as of writing fUSD had not yet regained parity with the US dollar—the asset’s price is $0.69, according to CoinGecko.

Cronje proposed a set of measures to stabilise the situation and boost the overall resilience of the Fantom ecosystem. In particular, they proposed liquidating positions that do not have overcollateralisation of 300%.

“Example: the collateral ratio for FTM is 50% if the price of FTM is considered to be $1000, the maximum amount you can mint in fUSD would be $500,” the author explained.

FTM quotes reacted positively to the prospect of Cronje’s return. As of writing, FTM trades near $0.49.

Back in March 2022, Fantom Foundation’s lead solutions architect Anton Nell and Andre Cronje decided to leave the cryptocurrency industry.

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