The BLA token is pegged to the BlablaBlock DAO treasury. The token price in the market approximately equals to the net asset value of the DAO.
It means buying the tokens equals to purchasing the fund.
For example, if the demand of BLA is really high, the market price(MP) will be greater than the net asset value(NAV) of the DAO. We will do market making to make MP and NAV converge. Assume...
- MP = $20
- NAV = $10
- BlablaBlock plans to use $100 to stablize MP
- Buy 10 BLA with the NAV price:
- Mint 10 BLA from the BLA token smart contract.
- Give $100 into the DAO treasury.
- The TVL of DAO will rise, but the NAV is still the same.
- Sell 10 BLA with the MP price:
- Sell 10 BLA at $20 in the market, and receive $200.
- MP will be converge to NAV.