Debasing
Last updated
Last updated
Every BRR token that is not staked, even those in the LP, are subject to a Debasing mechanism that sets Bera Reserve apart from every other OlympusDAO fork. This feature, burns over time the unstaked BRR supply, offsetting the inflation caused by Staking Rebases and the dilution caused by Bonds.
Since this core mechanic is applied also on BRR tokens in the LP, the price of BRR tokens will go up at the debase percentage due to the balanced nature of . In fact, V2 liquidity pools need to always be 50/50-balanced in dollar terms. Therefore, if you have 100 BRR paired with 100 HONEY (a stablecoin pegged to the value of 1$) it means the price of BRR is exactly 1$. Let's assume there is no trading for a while and the debasing mechanism burnt 10 BRR from the LP. Now we have 90 BRR paired with 100 HONEY, meaning the price of BRR is 1.11$