Price stability

lisUSD's price stability mechanism​​

Lista DAO is able to maintain lisUSD’s $1 value with respect to USD in the following scenarios:

When lisUSD > $1, the supply of lisUSD needs to increase:

• Since lisUSD is at a premium, borrowers are incentivised to borrow more lisUSD to sell for other assets for arbitrage opportunities.

• To reduce demand for lisUSD farming, Lista DAO will reduce lisUSD farming rewards by decreasing lisUSD borrowing interest.

When lisUSD< $1, the supply of lisUSD needs to decrease

Comment

• Since lisUSD is at a discount, borrowers are incentivised to buy lisUSD from the market to pay back the debt.

• To decrease lisUSD borrowing demand, Lista DAO will increase lisUSD borrowing interest, which increases lisUSD farming rewards