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Development Phases of $HOPE
The dedicated market makers ensure that $HOPE has sufficient liquidity through the BTC/ETH-backed tracking mechanism.
How does the BTC/ETH-backed tracking mechanism work?
BTC/ETH-backed tracking mechanism
- When there’s an increased demand for $HOPE in the market, $HOPE will trade at a premium to the tracking price.
- Market makers will sell $HOPE at high price in the market and also be incentivized to more minting activities, resulting in an increase in the supply of $HOPE.
- The expansion of $HOPE in circulation will bring the tracking price back in place.
- When there’s a decreased demand for $HOPE in the market, $HOPE will trade at a discount to the tracking price.
- Market makers will buy $HOPE at low price in the market and also be incentivized to more burning activities, resulting in a decrease in the supply of $HOPE.
- The contraction of $HOPE in circulation will bring the tracking price back in place.
Self-Correcting Pricing Mechanism
Once $HOPE reaches peg (the Peg Event), HOPE Gömböc will start to include stablecoins.
As the Peg Event takes place, dedicated market makers will be able to subscribe and redeem $HOPE 1:1 from the protocol using stablecoins.
In situations where the total value of HOPE Gömböc is less than total market cap of $HOPE’s face value, the dedicated market makers will subscribe/redeem $HOPE with a basket of BTC/ETH to bring the market price of $HOPE back to equilibrium, i.e.
$1.00. This self-correcting market mechanism is similar to the one described in Phase I.
How does the pegging mechanism work?
- When there is an increase in demand, $HOPE will be trading at a premium to
- The higher price will then incentivize more minting activities and result in an increase in the supply of $HOPE, which will bring the pricing back to
- Reserve assets - BTC / ETH / USDT(C) – are added to HOPE Gömböc during minting activity, ensuring sufficient intrinsic value backing $HOPE’s dollar peg.
- When there is a decrease in demand, $HOPE will be trading at a discount to
- The lower price will then incentivize more burning activities and result in a decrease in the supply of $HOPE, which will bring the pricing back to
- Reserve assets - BTC/ETH/USDT(C) – are removed from HOPE Gömböc
- During burning activity, retaining sufficient intrinsic value backing $HOPE’s dollar peg.
Subject to the LightDAO’s approval, $HOPE will be officially declared as the ecosystem’s native stablecoin as HOPE Gömböc reaches a certain multiple of the total face value of $HOPE.
BTC and ETH in HOPE Gömböc will be gradually converted to distributed, stable-value and liquid assets to avoid impact from coin price fluctuations.
Subject to LightDAO’s approval, $HOPE insurance fund (consisting of excess reserves and parts of the DAO’s treasury) will be set up as a war chest to protect the peg and defend $HOPE’s value.
Last modified 4mo ago