FREEDOM TO RISE
The currency has the freedom to rise in value as demand warrants.
DOWNSIDE VOLATILITY MITIGATION
System encourages market forces to buoy the market price towards the “high water mark.”
INCENTIVE TO HOLD
Align the interests of the entire ecosystem toward common goals.
Digital currencies are our future. But they’re often too volatile, preventing mainstream adoption. Stablecoins in general can help solve this, but they are no better than the assets, or in some cases the algorithms, to which they are pegged. They neither fall, nor rise far from that peg. Enter ndau, a buoyant digital currency free to rise as demand warrants while mitigating downside volatility using multiple mechanisms. ndau is designed to be a new kind of high quality digital asset intended for long term store of value.
How does ndau work?
New ndau are released into the market when demand pushes the market price of ndau upward along the Target Price Curve. There is a finite amount of ndau (1,000) at each price level on ndau’s Target Price Curve, each level higher than before. All proceeds received from the release of new ndau are deposited into an endowment for the purpose of managing ndau’s monetary policies and implementing open market operations, much like the reserves are used by a central bank.
As ndau trades in the secondary market, price stability mechanisms are triggered if selling pressure pushes the market price down too much. One such mechanism during these times is that sellers must forfeit a portion of the ndau they want to sell in order to get it into an exchange for sale. This disincentive during down markets also eliminates gradually the excess supply of ndau from circulation permanently until market prices are “buoyed” back up towards the Target Price.
Another stability mechanism is that ndau’s endowment supplies liquidity for repurchasing ndau from the open market at a Floor Price in case of an extreme market downturn. ndau’s Floor Price is dynamically determined as 1/2 the value of the Endowment, divided by the number of ndau in circulation. This repurchased ndau is removed permanently, or “burned”. And because the Floor Price is only 1/2, each time a repurchase happens, it drives the Floor Price upwards, stabilizing the market further.
These monetary policies create the buoyancy that makes ndau uniquely designed for a long-term store of value, and for the first time, truly competitive with alternatives, both digital and traditional.
The entire ndau ecosystem, from Oneiro to the Blockchain Policy Council to the Axiom Foundation, is backed by Venture Capital funding. All proceeds from the release of primary ndau are held in an Endowment for the purpose of managing monetary policy, creating liquidity, and establishing a floor price. The ecosystem is structured such that each entity therein benefits from the health and prosperity of the entire ndau economy, rather than merely the issuance of new ndau – aligning incentives to foster a dependable, secure, and long-term store of value.
With ndau, long-term stability is achieved by means more comprehensive than those undertaken by stable coins: ndau is buoyant. This means that ndau is a free floating, digital currency that has the freedom to rise in value as demand warrants; however, its downside risk is mitigated by structural mechanisms that incentivize free market forces to support the market price of ndau at key distress levels. The result is a digital currency that is resistant to inflation and which remains resilient and non-volatile in the face of market turmoil.
The Blockchain Policy Council is responsible for determining and ratifying the operating policies of ndau and has the power to oversee other entities throughout the ecosystem. The BPC consists of a group of nine delegates each of whom represent a different class of stakeholders responsible for managing policy that is in the best interest of the ndau holders themselves. The individuals which comprise the BPC are not led or operated by a fixed consortium of people or a by a private corporation. Rather, such individuals are directly elected by ndau holders themselves on a continual basis.