What is the Dynamic Peg?


What is the Dynamic Peg?

The Dynamic Peg is a brand new mechanism for stabilizing BAY. It is strictly controlled by the users, for the users. In a nutshell, it is a highly efficient form of democratic (voting-based) monetary policy.

By changing the speed in which coins can be spent, stakers can collectively change the liquidity of BAY’s supply.

As it’s known, price is determined where supply and demand intersect. The Dynamic Peg ties the supply of BAY to the volume of votes behind the coin, forcing a direction in price. This helps reduce speculation and tame wild volatility. Unlike traditional currency pegs, the Dynamic Peg is not backed by any asset or form of collateral. It is decentralized and highly resistant to centralized manipulation or regulation. Speculators can still seek “fair market value”, yet they have to contend against investors and marketplace users who desire stability over volatility.

This system creates three balances for BAY: Liquid, Reserve, and Frozen.

Due to the different levels of liquidity, Liquid (BAY) and Reserve (BAYR) are traded on separate markets, and traded at different exchange rates.

Frozen coins are either Liquid (BAY) or Reserve BAY (BAYR) that have been voluntarily timelocked (for 4-months and 1-month respectively) by the user in an off-exchange wallet. Both act as a form of “savings” and earn higher stake rewards than non-frozen BAY or BAYR.

Because of the timelock, frozen coins cannot be traded until after the timelock has expired.

Questions, comments, concerns? Please post them in the comments below!

Why are my wallet balances always changing?
Can I convert my Reserve coins (BAYR) to Spendable (BAY)?