🏰Stability Mechanism

How Zetos Cash protocol work?

The Zetos Cash protocol is designed to guarantee the exchange of Zetos Cash (ZEC) tokens at a value of $1, and the stabilizer (in-protocol stabilization mechanism) is responsible for adjusting Zetos Cash (ZEC) supply to match demand.

Every 24 hours, the time-weighted average of the Zetos Cash (ZEC)-USDT exchange rate is read from the pancake swap contract, and then passed to the Zetos Cash protocol for reference by its stabilization mechanism.

When the price of Zetos Cash (ZEC) is higher/lower than (1+ε)USDT, the stabilization mechanism will be triggered, where ε is a parameter defining the price stability range of Zetos Cash (ZEC) tokens, and the initial value of ε is set to 0.05.

Tightening strategy

At any time, Zetos Bond (ZEB) can be purchased from the protocol in exchange for Zetos Cash (ZEC).

The purchase of Zetos Bond (ZEB) is carried out at the price set by the algorithm. For example, when the price of Zetos Cash (ZEC) is x USDT, Zetos Bond (ZEB) will be purchased at x Zetos Cash (ZEC) (the effective price is x^2 USDT ), and promises that Zetos Bond (ZEB) holders will receive a premium when they redeem. Zetos Bond (ZEB) can be converted to Zetos Cash (ZEC) when conditions are met.

Of course, the price of Zetos Cash (ZEC) exceeds 1 USDT (x>1), and Zetos Bond (ZEB) can still be purchased, but the purchase is definitely a loss.

For example, when 1 Zetos Cash (ZEC) = 1.1USDT, Zetos Bond (ZEB) is sold at a price of 1.1 Zetos Cash (ZEC), and 1 Zetos Bond (ZEB) can only be redeemed for 1 Zetos Cash (ZEC).

Therefore, Zetos Bond (ZEB) purchases are only expected to occur when 1 Zetos Cash (ZEC) trades below 1USDT. While it is still possible to buy Zetos Bond (ZEB) when the protocol allows Zetos Cash (ZEC) to be priced above $1, it is disabled on the base cash frontend to avoid user confusion.

Expansion strategy

When the price of Zetos Cash (ZEC) is higher than (1+ε) USDT, the system will generate totalSupply*(oraclePrice-1) new number of Zetos Cash (ZEC) tokens.

Depending on the vault's Zetos Cash (ZEC) balance, newly issued Zetos Cash (ZEC) is either deposited into the vault or the boardroom.

If the vault has a balance of more than 1000 Zetos Cash (ZEC), then it is reasonable to assume that either all Zetos Bond (ZEB) has been redeemed, or no Zetos Bond (ZEB) holders are currently willing to redeem.

Either way, it shows that there is currently no need to redeem Zetos Bond (ZEB), so newly minted Zetos Cash (ZEC) is offered to the boardroom contract.

If the balance of the vault is lower than 1000 base cash, it is assumed that there will be additional Zetos Bond (ZEB) to Zetos Cash (ZEC) redemption demand. Therefore, the issued Zetos Cash (ZEC) is transferred to the vault so that Zetos Bond (ZEB) holders can exercise their redemption rights.