Dynamic Interest Peg Stability Mechanism and Zap Vaults

This proposal outlines the development of innovative features within the xBacked ecosystem on Algorand. We aim to introduce a new peg mechanism with dynamic loan rates, ensuring the stability of the pegged value. Additionally, we plan to build a zap function for vaults, enabling users to bring one side of the LP, allowing the protocol to mint xUSD for the other side. These vaults will operate on an auto-compounding mechanism, gradually paying off loans and enhancing the ecosystem's resilience. # Project Components - Design and Implement Dynamic Loan Rate Mechanism: Develop a robust mechanism that dynamically adjusts loan rates based on the peg's stability. If xUSD depegs, falling below the desired $1 value the protocol interest rates will increase with the increase varying depending on the severity of the depeg. Integration with xUSD Protocol: Integrate the dynamic loan rate mechanism seamlessly into the xUSD protocol. Smart Contract Development: Develop and deploy smart contracts to enable the dynamic adjustment of loan rates. - Design and Development: Create a user-friendly zap function allowing users to bring only one side of a whitelisted LP, triggering the protocol to mint xUSD for the other side with the LP becoming collateral for the xUSD issued. Auto-Compounding Mechanism: Implement an auto-compounding feature within vaults to ensure continuous rewards are compounded into an increased collateral position. Security Audits and Testing: Conduct thorough security audits and extensive testing to ensure the reliability and safety of the zap function and auto-compounding mechanism.