Global Settlement

Understanding global settlement

A key feature of the Volmex protocol is the global settlement or settle function, which enables the volmex.finance core multi-sig to shut down the system so that outstanding volatility tokens become a claim on the underlying collateral of the system. Inspired by MakerDAO's global settlement feature, global settlement similarly provides the Volmex protocol flexibility and is conducive to a healthy peg. Global settlement is intended to be a last resort, though can certainly be used.

Global settlement provides the ability to settle the VolmexProtocol contract at a specific price, settlementPrice. Once the settle function has been executed by the volmex.finance core multi-sig, the redeemfunction is disabled and the redeemSettledfunction is enabled. At this point, Ethereum Volatility Index Tokens (ETHV) (or other volatility tokens) are redeemable for the settlementPrice. Conversely, the Inverse Ethereum Volatility Index Token (iETHV) would be redeemable for the amount of collateral required to mint one of each token less the settlementPrice.