How do we keep the tokens stable?
This is the complex/interesting part. First of all, we’re deriving from the great work done by the FRAX team, who managed to build very robust foundations for a partially collateralized, algorithmic stablecoin.
We’ve added some additional logic to support multiple fiat currencies and not just USD, as well as changed the collateral to be only fully decentralised BTC & ETH.
The stability is algorithmically achieved by the combination and constant adjustment of multiple factors, such as collateral ratio, collateral and buffer pricing, and market trust. We've also refined some of the redemption mechanisms in order to remove any incentivize for a "bank run" and have a fairer collateral distribution upon redemption.