AURE Stablecoin is valuable to users on our ecosystem because it maintains its price peg. The Crypstarter Balance Protocol uses the basic market forces of supply and demand to maintain the price of AURE.
When the demand for AURE is high and the supply is limited, the price of AURE increases. When the demand for AURE is low and the supply is too large, the price of AURE decreases. The protocol ensures the supply and demand of AURE is always balanced, leading to a stable price.
When the AURE price is higher than its peg, the supply is too small and the demand is too high. The protocol incentivizes users to burn CST and mint AURE, which will inflate the supply of AURE until a supply-demand balance is created.
Users minting more AURE from the burned CST until AURE is pulled back to the $1 price. Meanwhile, burning CST causes the supply of CST to decrease and increases the price of CST.
When the AURE price is below its closing level, it means too much supply and too little demand. The protocol incentivizes users to burn AURE and mint CST, which will decrease the supply of AURE until a supply-demand balance is created.
Users minting more CST from AURE are burned until AURE is pulled back to the $1 price. Meanwhile, CST minting causes CST supply to increase and lowers the price of CST but at the same time other protocols in the system will ensure the incentive mechanism to increase CST price again later.