RATE Allocation

Total RATE Supply: 1,000,000
Team: 10%
Treasury: 7%
Community Rewards: 78%
Community Treasury: 5%

Buyback and Burn

TAI uses the 'buyback and burn' strategy of DAI/RAI.
Fees from TAI loans produce revenue for the system. This revenue is in the form of TAI and is initially used to seed a small surplus buffer of TAI. Revenue is also used to pay for system calls that update collateral prices, collect fees, and maintain the protocol.
TAI that is remaining after these expenses is deemed surplus and is auctioned in exchange for RATE. The collected RATE is then burned and the supply is deflated, hence the name 'buyback and burn'.

Mint and Sell

The above 'buyback and burn' scenario is what happens during normal operation of the protocol. This 'mint and sell' safety mechanism ensures the system can function in extreme market conditions.
During very large collateral price drops(or oracle failures) it is possible a safe for a safe to have more debt than the value of collateral locked. In this scenario, the system will use TAI from the surplus buffer to cover the excess debt the safe has. If the surplus buffer has already been exhausted from covering other underwater safes, the system has incurred bad debt.
To cover the bad debt the system will mint RATE, inflating the supply, and then sell it for TAI. The TAI is then used to cover the bad debt.