⚖️Stabilization Mechanism

Our stabilization mechanism employs distinct processes for both expansion and contraction phases, incorporating dedicated fund allocations, smoothing functions, and emergency safeguards.

A. Expansion Phase (Price Above Peg)

When either BLUE or GREEN trades above its peg, new coins are minted and allocated as follows:

• Boardroom: 50% is allocated to the Boardroom, where RED is staked to reward active participants.

• DAO Fund: 20% is directed to the Dao Fund (Community Treasury).

• Collateral Pool: 20% is reserved for the Collateral Pool to support the protocol during contraction phases.

• Development Fund: 10% is allocated to the Dev Fund for ongoing development and marketing.

During expansion, up to 10% of the BLUE (and GREEN) balance in the Collateral Pool will be converted to S (and USDC.e). All parameters are adjustable through voting by Share (RED) holders.

B. Contraction Phase (Price Below Peg)

If BLUE (or GREEN) falls below its peg, the protocol initiates corrective measures:

Redemption to Collaterals

Users are encouraged to burn BLUE (or GREEN) via a redemption process that rewards them with collateral plus RED if the depeg is severe. This mechanism incentivizes redemption, reduces the token supply, and helps drive the price upward.

Collateral Pool Utilization

In each contraction epoch, an adaptive burn mechanism is triggered, whereby up to 10% of the BLUE (or GREEN) balance in the Collateral Pool is burned. The burn rate is adjustable through algorithmic triggers and community governance.