Bucket Protocol
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  • Introduction
    • Introduction
    • Key Advantages
  • Bucket Campaign
    • Bucket x Sui Wallet Campaign
  • Mechanisms
    • System Overview
    • Terminology
    • Borrowing
    • BUCK Savings Rate (BSR) and sBUCK
    • Tank and Liquidations
    • Peg Stability Module
    • Redemptions
    • Recovery Mode
    • Flash Loan
    • Protocol Revenue
  • Price Stability & Depeg Analysis
    • Scenarios of Upward Depeg
    • Scenarios of Downward Depeg
    • Other Special Situations and Details
  • Outro
    • Oracles
    • Security
    • FAQ
    • Contracts
    • Links
  • External Audits & Analysis
    • Introduction
    • Smart Contract Audit
    • Formal Verification
    • Market Risk Assessment
    • Terms of Service
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  1. Price Stability & Depeg Analysis

Scenarios of Upward Depeg

PreviousPrice Stability & Depeg AnalysisNextScenarios of Downward Depeg

Last updated 1 year ago

Borrowing/minting becomes more attractive because it means BUCK's purchasing power is rising, and users can anticipate repaying later at 1 dollar, which is a lower price.

When borrowing/minting occurs, it increases the total supply of BUCK. This, in turn, leads to a depreciation of BUCK against the dollar. This depreciation acts as a negative feedback mechanism, regulating and preventing BUCK from upward depeg.

Bucket provides that users can mint BUCK with whitelisted stablecoins such as USDT or USDC with a 1:1 ratio.

When BUCK price is higher than $1 on the market, arbitrageurs can mint BUCK with PSM and balance the price on the market.

This directly increases the market supply of BUCK and is a direct means of suppressing its upward depeg.

However, compared to downward depeg, upward depeg is generally not a particularly worrying situation.

Peg Stability Module