How do you maintain price stability?

How do you maintain price stability?

The value of our currency-backed stablecoins track those of their underlying currencies, i.e. they won’t suddenly depreciate 5% in value overnight.

In contrast to 1:1 pegged coins, a currency-backed token increase or decrease in value over time with the interest rate of the underlying currency. From a user perspective this is similar to a savings account in a bank.

Common to all tokens, the only thing supporting its value is buy-side demand. The price stability towards the underlying currency is accomplished by keeping a reserve consisting of bank deposits and government bonds, all in the same denomination as the token currency. When a token is sold, the proceeds are added to the reserve. Consequentially we can maintain a constant buy side for the tokens using the funds of the reserve.

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