Stabilization Mechanism

When Fatfi Cash is below $1

When Fatfi Cash is traded below $1, users will be able to purchase Fatfi Bonds at a certain discount to establish the price stability of Fatfi Cash, with the expectation of future profits upon redemption.

Each bond promises the holder exactly 1 Fatfi at some point in the future under certain conditions. Whenever a user purchases Fatfi Cash, it is burned, causing a decrease in the circulating cash supply. Bonds do not have interest payouts, nor do they have maturity or expiration dates. Rather, they can be redeemed on a 1:1 ratio with Fatfi Cash when the price rises above $1.

Purchased bonds can be redeemed on a 1:1 ratio with cash only when the oracle price of cash is above $1. This prevents bondholders from cutting their losses on redemptions and creating unnecessary increases in supply.

When Fatfi Cash exceeds $1

When the price of Fatfi Cash exceeds $1, the contract primarily allows bond redemptions to bond redeemers. Even after the bonds are redeemed, if the price of Fatfi Cash is traded above the price of $1, an increase in the demand of Fatfi Cash results in new Fatfi Cash tokens being minted and distributed to Fatfi Share holders.

For instance, let’s assume that the price of Fatfi Cash exceeds $1 even after bond redemption. In this case, the Treasury contract mints new Fatfi Cash seigniorage into existence. This seigniorage is given to the Boardroom, where users can stake Fatfi Shares and earn daily seigniorage based on the price of Fatfi Cash.