The Inflation Controller
Uniqo's innovative Rebound feature provides the protocol with a new method of strategically managing inflation. Thanks to this cutting-edge solution the protocol becomes independent from any market fluctuation and maintains a clean and constant distribution of interests while protecting investor funds.
The Protocol automatically and constantly distributes a fixed reward rate, resulting in an increase in the circulating supply (i.e. inflationary action). When the increase in supply becomes excessive in terms of asset value sustainability, the Rebound Function of the smart contract is activated, triggering a distributed collective burn (i.e. deflationary action) which creates an equal and healthy inflation management solution for all the investors and the project’s economy.
In two words the 'Rebound function' is an inflation controller.
First of all, the Rebound is not a recurring function of the smart contract. It is triggered only if and when the self-aware smart contract detects an imbalance in the distribution of the assets among the user base, and intervenes by strategically adjusting the token allocation according to the supply, in order to protect portfolios in the most profitable way.
The Rebound Function continuously tracks inflation, and when it detects that in the last reward epoch there has been an excessive increase of the UNIQO supply in the LP, it will trigger the Rebound Effect and automatically calculate the minimum amount of inflation that needs to be removed from the circulating supply in order to return back to a sustainable ratio in the LP.
The Rebound trigger is the UNIQO to BUSD ratio in the LP: when the ratio climbs by 7% above the ratio recorded during the moment the minimum amount of UNIQO was registered in the liquidity pool, the Rebound is activated. At this point, the Rebound reduces inflation by restoring the ratio to its prior value (the value registered during the moment the UNIQO in the pool were at their minimum).
- Rebounding effectively makes UNIQO more scarce
- Increased scarcity generates asset appreciation
- Sustainability of the protocol is secured thanks to the Rebound
Last modified 4mo ago