🪢Mechanism

The protocol will always be in either the Expansion or Contraction state.

Expansion

When PDO is traded at the 1 USDC threshold, the protocol is in the Expansion state.

PDO supply will be expanded to bring the PDO price back to 1 USDC.

In the Expansion state, PSH staker Boardroom will receive additional PDO rewards. At the same time, in the Expansion state, users can redeem PBD to receive profits in PDO.

Contraction

When PDO is traded below the 1 USDC threshold, the protocol is in the Contraction state.

PDO supply will be contracted to bring the PDO price back to 1 USDC. In this state, PDO will not be minted anymore. The Banks provide the burn PDO feature to receive PBD at a 1:1 ratio.