The ESD algorithmic stablecoin has improved upon AMPL's rebase mechanism for better stability.
AMPL's rebase mechanism works as follows: when the price is above $1.05, it inflates; when below $0.95, it deflates. All AMPL holders are treated equally, sharing inflation or deflation together.
ESD's algorithmic stablecoin has modified the rebase mechanism:
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When ESD is above $1, new ESD is rebased. However, instead of inflating for all ESD holders, inflation is periodically distributed to ESD trading pair liquidity providers. The purpose is to ensure ESD's stability while maintaining its liquidity.
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When ESD is below $1, coupons are issued. Users can purchase coupons from the system using ESD. These coupons can be redeemed for more ESD in the future when ESD's price exceeds $1.
Note: Coupons have an expiration period of 90 rebase cycles (30 days after purchase). If ESD doesn't rise above $1 before the coupon expires, the coupon will be destroyed.
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After ESD incurs debt, no new ESD will be rebased until all "coupons" are repaid. Therefore, when ESD's price returns above $1 USD, priority is given to repaying "coupons." Only after full repayment will new ESD be rebased.
