Scenarios of Upward Depeg

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 Peg Stability Module 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.

Last updated