Maintaining the Peg to the Consumer Price Index (CPI-U)

The purpose of Saver Tokens are to trade at the Target Price. The Target Price is based on the US Consumer Price Index (CPI-U) where 100 Savers equals the Index converted into a dollar value.

Two mechanisms, one passive, the other active are used to maintain this parity. These are the same mechanisms used by stablecoins, ETFs and currency boards to maintain the value of an asset at a stated price. The difference with Saver Token is that the passive mechanisms are made explicit whereas they are implicit in the other examples.

Passive Mechanism – Expectation and self-interest. The only reason for buying Saver Tokens is to trade at the Target Price. Therefore it is in the interest of all token holders to do this.

Active Mechanism – Demand is restricted by new tokens entering the market at the Target Price +2%. Reserves enable us to purchase tokens at the Target Price minus 2%. These activities help to keep the price of Saver Tokens within this band.

For more information on passive and active parity mechanisms please see:

Is this article helpful for you?