Peg Stability Module

Bucket’s Peg Stability Module (PSM) ensures BUCK’s peg integrity. It’s a distinct vault featuring a 100% Minimum Collateral Ratio (MCR), enabling a direct 1:1 conversion between BUCK and USDC/USDT. The vault under the PSM is shared, with specific parameters such as a 0% fee for PSM in and a 0.3% fee for PSM out.

How would a PSM stabilize the BUCK peg?

If BUCK is above 1 USDC, users can exchange USDC for BUCK at 1:1 and then sell BUCK for a profit. This creates selling pressure on BUCK, driven by market incentives, which guides BUCK’s price back to 1 USDC.

If BUCK is below 1 USDC, users can purchase BUCK and convert it to USDC via the PSM. This buying pressure, profitable for users, helps reestablish the 1 USDT/USDC/BUCK peg by increasing the demand for BUCK.