ToxicDeer token is designed to be used as a medium of exchange. The built-in stability mechanism in the protocol aims to maintain ToxicDeer's peg to 1 USDC token in the long run.
When DEER is below Peg
When DEER price is below USDC Current Market Price (Peg), token holders can purchase XDBOND and DEER will be burnt to reduce the circulating supply when users redeem DEER tokens with a 1:1 ratio.
When DEER is above Peg
When DEER price is above USDC Current Market Price (Peg), the token supply will have to expand to push it back down to Peg and the contract will allow the redemption of the XDBOND.
When the price of DEER continues trading above the USDC Current Market Price (Peg) after bond redemption, the contract mints an appropriate amount of new DEER and this will be distributed to the XDSHARE stakers.
Note that DEER actively pegs via the algorithm, it does not mean it will be valued at 1 USDC all times as it is not collaterized . DEER is not to be confused for a crypto or fiat-backed stablecoin.
ToxicDeer Shares (XDSHARE) are one of the ways to measure the value of the ToxicDeer Protocol and shareholder trust in its ability to maintain DEER close to peg. During epoch expansions the protocol mints DEER and distributes it proportionally to all XDSHARE holders who have staked their tokens in the Boardroom.
XDSHARE holders have voting rights (governance) on proposals to improve the protocol and future use cases within the ToxicDeer finance ecosystem.
XDSHARE has a maximum total supply of 100000 tokens distributed as follows:
- 1.20% - 20,000 XDSHARE will be allocated to DAO Fund
- 2.17.5% - 7,500 XDSHARE will be allocated to Insurance Fund
- 3.12.5% - 12,500 XDSHARE will be allocated for the development (marketing, audits, dev rewards, community engagements and other expenses)
- 4.50% - The remaining 50,000 XDSHARE will be allocated to incentivize Liquidity Providers
ToxicDeer Bonds (XDBOND) main job is to help incentivise changes in DEER supply during an epoch contraction period. When the TWAP (Time Weighted Average Price) of DEER falls below 1 USDC, XDBONDs are issued and can be bought with DEER at the current price. Exchanging DEER for XDBOND burns DEER tokens, taking them out of circulation (deflation) and helping to get the price back up to 1 USDC. These XDBOND can be redeemed for DEER when the price is above peg in the future, plus an extra incentive for the longer they are held above peg. This amounts to inflation and sell pressure for DEER when it is above peg, helping to push it back toward 1 USDC.
Contrary to early algorithmic protocols, XDBOND do not have expiration dates.
All holders are able to redeem their XDBOND for DEER tokens as long as the Treasury has a positive DEER balance, which typically happens when the protocol is in epoch expansion periods.