Stabilisation Mechanism
Achieving Peg
BasisX is designed to guarantee BXC tokens to be exchanged at a value of a single US dollar, with the stabilizer (in-protocol stability mechanism) in charge of matching the supply of BXC to their demand.
Every 6 hours, the time-weighted average of the BXC-USDT exchange rate is read from the contract, which is then fed into the BasisX protocol to be referenced by its stability mechanism.
The stabilization mechanism is triggered whenever the price of BasisX Cash is observed to be above / below (1+Ξ΅) USDT, where Ξ΅ is a parameter that defines the range of price stability for the BXC token. On launch, Ξ΅ is set to be 0.05.

Contractionary Policy

At any point in time, BXB can be bought from the protocol in exchange for BXC. Purchase of Bonds are performed at an algorithmically set price. With a BXC oracle price of P USDT, bonds are sold off at a price of P BXC (effective price being P^2 USDT), promising bond holders a premium when redeemed. Purchased bonds can be converted to BXC, insofar as the preconditions are met and the Treasury is not empty.
Bonds can still be purchased even when BXC trades above 1 USDT (P > 1), however this nets the purchaser a loss when redeemed. For example, when 1 BXC = 1.1 USDT, a Bond is sold for 1.1 BXC. Since all Bonds can only be redeemed for 1 Cash, this yields the purchaser a net loss. Thus, bond purchases are only expected to occur when 1 BXC trades below 1 USDT. Although bond purchases at a BXC price above 1 USD is allowed in the contract, it is disabled in the BasisX Cash frontend to avoid user confusion.

Expansionary Policy

If the price of BasisX Cash is observed to be higher than (1+Ξ΅) USDT, the system mints totalSupply *(oraclePrice-1.05) number of new BasisX Cash tokens. The issued BasisX Cash is either deposited to the Treasury or the Boardroom, depending on the BasisX Cash balance of the Treasury.
If the Treasury has a balance above 1,000 BasisX Cash, then it is logical to assume that either all bonds have been already redeemed, or no bond holder is currently willing to perform a redemption. Either way, this signals that the demand for bond redemption do not exist at this time, and thus the freshly minted BasisX Cash is given to the Boardroom contract.
However, if the Treasury has a balance of below 1,000 BasisX Cash, then it is assumed that there will be additional demand for bond-to-cash redemption. Therefore, the issued BasisX Cash is routed to the Treasury so that Bond holders can exercise redemptions.
Last modified 10mo ago