Initial Network State

Our initial goal is not to find a stable price. This may seem antithetical to our currency aspirations, but we ensure you it is not. Rug can be tuned to optimize for different things. The main tradeoff is volatility and profitability versus stability and consistency. With volatility and profit comes growth; this is what we want early on.

With tight policy and scale, Rug should function well as a stable asset. Upward and downward pressures should stabilize at some non-intrinsic value. With loose policy, regardless of scale, Rug has the potential to act as a wealth creation machine. The market premium of the token measures the positive sum of the game; all extrinsic value is new wealth created.

Alpha State

The initial network features a one-way treasury (money goes in, none comes out), the bonding contract (through which supply increases and profits are produced i.e bonding), and the staking contract (where profits are distributed).

The following are the initial policy states:

• BCV - BCV varies based on bond types . It is tuned regularly by the Policy team to meet the protocol goals. For example, if the protocol wants to accumulate more liquidity into its treasury, it can lower the BCV for allowing users to bond RUG with LP to increase their bond capacity.

• Bond vesting term - It is set to a fixed number Avalanche blocks or approximately five days for all Bonding Asset types.

• RUG distribution - Every time someone Bonds RUG, the proceed will go to the Rug Treasury. A corresponding amount of RUG will be bonded and distributed to three parties:

• • Bonder - The Bonder will receive the quoted amount of RUG bonded linearly over the vesting term.

  • DAO - The DAO receives the same amount of RUG as the bonder. This represents the DAO profit.

  • Stakers - After accounting for the RUG distributed to the bonder and the DAO, the rest will be distributed among all stakers in the protocol.