Why is ndau burned?

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  4. Why is ndau burned?

ndau has a unique feature known as the Stabilization Incentive Burn (“SIB”) system to mitigate downward volatility. When the Market Price of ndau drops to 5 percent below the Target Price, the SIB activates. The SIB is a fee that is applied on top of normal transaction fees. The SIB rate progressively increases as the Market Price approaches the Floor Price, and the ndau collected through the SIB fee are permanently removed from circulation.

The SIB begins at 0 percent when the Market Price drops to 5 percent below the Target Price and climbs to 50 percent as the Market Price approaches the Floor Price. The SIB reduces the incentive to sell during down market conditions because the cost to do so grows higher the more the market declines.

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