Minter

The Minter contract handles fee calculation for the minting, burning and redeeming of cUSD, where dynamic fees are used to maintain the exposure of each backing asset to its optimal level. A balanced reserve composition reduces centralization of a particular asset, ensuring that the protocol is resilient to black swan events. Fees accrue to the treasury used for protocol safety.

Mechanics

Dynamic Mint/Burn Fees

Fees are dynamically adjusted according to the exposure of assets in the system. For each asset, there are two predefined piecewise linear functions that determine the mint/burn fees. Fees increase as they deviate from the optimal ratio, increasingly sharply beyond the kink ratio.

Process Flow for Mint/Burn:

1. Pre-fee Calculation: Calls _amountOutBeforeFee to get base amount and new ratio

2. Whitelist Check: Bypasses fees if user is whitelisted

3. Fee Application: Applies dynamic fees using _applyFeeSlopes if not whitelisted

Fee Calculations

The fee system operates across three distinct zones based on where the current ratio is:

1. current ratio <= optimal ratio: Minimum mint fee to mint, 0 fees for burn

2. optimal ratio < current ratio < kinkRatio: Linear fee increase using the first slope

3. current ratio > kinkRatio: Steep fee increase using the second slope

Price Oracles are used for fee calculations and amount determination. A minimum mint fee is placed to prevent manipulation around price oracles.

The current minimum mint fee is set to 10bps, capped to 5% maximum.

Fee Parameters

Parameter	Description	Validation
minMintFee	Base fee for minting	≤ 0.05e27 (5%)
optimalRatio	Target allocation ratio	0 < ratio < 1e27
mintKinkRatio	Mint fee kink point	0 < ratio < 1e27
burnKinkRatio	Burn fee kink point	0 < ratio < 1e27
slope0	First slope coefficient
slope1	Second slope coefficient

Redeem Fees

Redeem fees in Cap Protocol are simple percentage-based fees applied to proportional redemption operations. Same fees apply to all assets proportional to their asset allocation. Whitelisted users pay 0% redeem fee

Process Flow for Redeem:

1. Fee Determination: Sets redeem fee (0 if whitelisted)

2. Share Calculation: Calculates user's share of total supply

3. Amount Calculation: Calculates proportional amount for each asset

4. Fee Application: Applies redeem fee to each asset amount

Whitelisting

Whitelisted users can bypass fees for larger scale operations. Whitelist management is restricted to authorized admins.

Architecture

Minter

Core Functions

getMintAmount: Calculates mint amount and fees for a given asset input

function getMintAmount(address _asset, uint256 _amountIn) external view returns (uint256 amountOut, uint256 fee)

• _asset: Asset address to mint with

• _amountIn: Amount of asset to use for minting

• Returns: Amount of cUSD to mint and fee to be paid

getBurnAmount: Calculates burn amount and fees for a given cUSD input

function getBurnAmount(address _asset, uint256 _amountIn) external view returns (uint256 amountOut, uint256 fee)

• _asset: Asset address to burn for

• _amountIn: Amount of cUSD to burn

• Returns: Amount of asset to receive and fee to be paid

getRedeemAmount: Calculates redemption amounts for multi-asset withdrawal

function getRedeemAmount(uint256 _amountIn) external view returns (uint256[] memory amountsOut, uint256[] memory redeemFees)

• _amountIn: Amount of cUSD to redeem

• Returns: Amounts of each asset to receive and redeem fees

Admin Functions

setFeeData: Sets the fee parameters for an asset

function setFeeData(address _asset, FeeData calldata _feeData) external checkAccess(this.setFeeData.selector)

• _asset: Asset address to configure

• _feeData: Complete fee configuration structure

Parameters:

• minMintFee: Minimum mint fee (maximum 5%)

• slope0: Fee slope below kink ratio

• slope1: Fee slope above kink ratio

• mintKinkRatio: Mint fee kink ratio threshold

• burnKinkRatio: Burn fee kink ratio threshold

• optimalRatio: Optimal allocation ratio

setRedeemFee: Sets the global redeem fee

function setRedeemFee(uint256 _redeemFee) external checkAccess(this.setRedeemFee.selector)

• _redeemFee: Redeem fee percentage in ray format (1e27 = 100%)

setWhitelist: Sets whitelist status for a user

function setWhitelist(address _user, bool _whitelisted) external checkAccess(this.setWhitelist.selector)

• _user: User address to modify

• _whitelisted: True to whitelist (exempt from fees), false to remove

View Functions

• whitelisted: Checks if a user is whitelisted

Minter Logic

The MinterLogic library provides four main functions that handle the complete lifecycle of minting, burning, and redeeming operations:

1. amountOut - Main entry point for mint/burn calculations with fee application

2. redeemAmountOut - Handles proportional redemption calculations

3. _amountOutBeforeFee - Internal function for calculating the base amount and new asset ratio before applying fees

4. _applyFeeSlopes - Internal function for dynamic fee application based on the current ratio

Data Structures

MinterStorage

struct MinterStorage {
    address oracle;                           // Oracle address for pricing
    uint256 redeemFee;                        // Global redeem fee
    mapping(address => FeeData) fees;         // Fee data per asset
    mapping(address => bool) whitelist;       // Whitelist status per user
}

FeeData

struct FeeData {
    uint256 minMintFee;        // Minimum mint fee (maximum 5%)
    uint256 slope0;            // Fee slope below kink ratio
    uint256 slope1;            // Fee slope above kink ratio
    uint256 mintKinkRatio;     // Mint fee kink ratio threshold
    uint256 burnKinkRatio;     // Burn fee kink ratio threshold
    uint256 optimalRatio;      // Optimal allocation ratio
}

FeeSlopeParams

struct FeeSlopeParams {
    bool mint;                 // True if applying to mint, false if burn
    uint256 amount;            // Amount of asset to apply fee to
    uint256 ratio;             // Ratio of fee to apply
}

AmountOutParams

struct AmountOutParams {
    bool mint;                 // True if minting, false if burning
    address asset;             // Asset address
    uint256 amount;            // Amount of asset to mint or burn
}

RedeemAmountOutParams

struct RedeemAmountOutParams {
    uint256 amount;            // Amount of cap token to redeem
}