Just to make sure I understand correctly...
By being able to change the liquid supply, we can manipulate the spot price. This shouldn't affect market cap, however, because we're decreasing the supply to increase the spot price, and increasing the supply to decrease spot price. Since market cap = (supply x spot price), in theory, we should be able to keep the price constant.
My questions:
1. At what frequency is the liquid supply updated? It's not uncommon for crypto to have ±10% in a few minutes, and this could be troublesome for a consistent peg.
2. Is voting really going to be effective enough to keep track? It seems like it would be a full time job to constantly adjust the liquid supply manually.
3. Does the existence of illiquid supply affect the demand in any passive way? The dynamics here seem complex.
4. Will we ever get into a situation where BAY will be locked away indefinitely, in a sort of "checkmate" between keeping the peg consistent, and the inevitability of a drop in demand if the peg were to change (to release illiquid funds)?
I have taken this info from a slack discussion that was happening today as other people have asked about it.
How to vote.there is a default setting in the wallet So by default you are voting to automate the pegging, which means you are requesting an algorithm decide for you. Your other 3 options are:
- Vote to Deflate
- Vote to Inflate
- Vote to Maintain Supply
If you select any of the bottom 3 you will need to cast a vote to let your voice be heard. All that requires from this point on is that you stake your Client
If you change your mind in the future you simply change the setting.
It's that simple!
How often voting occurs.The voting could technically be counted 24 times a day . . once an hour. meaning 24% compound + or - in either freeze or thaw. That is really aggressive and can force a pretty stable price or if we want a bit more play or slow and gradual rolling peg the temperment of 2-5% maximum per day (counting votes 5 times a day) is much more slow freeze
please keep in mind this is on going discussions as its never been done before.
David's trying to think of everything like the chess master he is. He's always trying to think 5-10 steps ahead