Oracle Pricing Math

Why not an AMM?

Most DeFi tokens use an AMM (Automated Market Maker) where price is determined by the ratio of tokens in a pool (x * y = k).

• Problem: AMMs suffer from slippage and impermanent loss. A large buy can artificially pump the price of Gold locally, decoupling it from the real world.

• Solution: Aureo uses a Direct Oracle Model. The price is fixed to the real-world XAU/USD price feed.

Pyth Network Integration

We utilize the Pyth Network Oracle on Mantle Sepolia to fetch the Gold Spot Price.

Feed ID: 0x765d2cd... (XAU/USD)

The Normalization Formula

Pyth returns prices with a variable exponent (usually -8). However, Solidity logic usually works with 18 decimals (wei).

The math used to normalize Pyth's returned value to 18 decimals:

$$P_{target} = P_{raw} \times 10^{(18 + expo)}$$

Example:

• Raw Price: 265050000000 (Integer)

• Exponent: -8

• Real Price: 2,650.50

In our Smart Contract AureoRWAPool.sol, the steps are:

1

Receive raw price

We receive 265050000000 from the Pyth feed.

2

Compute adjustment

Calculate adjustment: 18 + (-8) = 10.

3

Apply scaling

Multiply: 265050000000 * 10^10.

4

Result (18 decimals)

Result: 2,650,500,000,000,000,000,000 (18 decimals).

Staleness Protection

To prevent users from trading on old prices during network congestion, we implement a timestamp check in the contract.

AureoRWAPool.sol

// AureoRWAPool.sol check
if (block.timestamp - price.publishTime > 60) {
    revert("Oracle Price Stale");
}