1.3 Protocol Rules
To achieve price-supply equilibrium, the protocol expands and contracts supply in one of two ways. Given a price target, Pt and price threshold, δ:
Below the threshold (Pt - δ) the protocol contracts.
The price target, Pt, is set to the purchasing power of one 2019 US dollar as represented by CPI. And the price threshold δ is set to 5%.
To avoid unnecessary overcorrection, the protocol grades supply changes as though they will distribute evenly over the course of 10 days. For example:
The supply change is recomputed and executed no more than once every 24 hours. This operation is stateless, meaning each day the protocol recomputes a supply target based on the latest price difference, and executes as though the change will occur evenly over the next 10 days without any memory of the previous day’s supply change.