Supply Adjustment Mechanism
To detail the Supply Adjustment Mechanism for the $KAGE token, let's break down each component of the formula and how they interact to ensure a stable and sustainable token economy.
Supply Adjustment Mechanism
Adjustment Formula: The formula for adjusting the supply of $KAGE is given by:
New Supply = Current Supply × ((T×V)/S)
T = Total Transaction Volume
V = Velocity of Money
S = Stability Factor
Components Explained
Total Transaction Volume (T)
Represents the total amount of $KAGE tokens transacted over a specific period (e.g., daily, weekly).
High transaction volume can indicate increased demand, which may warrant an increase in supply to maintain price stability.
Velocity of Money (V)
Velocity (V) is a measure of how quickly money changes hands within the economy.
A higher velocity indicates a more active economy where tokens are frequently traded, while a lower velocity suggests less movement and potentially more holding.
Stability Factor (S)
A predefined constant set based on ongoing market analysis.
This factor is crucial for moderating the extent of supply adjustments. It's set to control inflation or deflation, ensuring the token's value doesn't fluctuate too wildly.
The factor can be adjusted periodically based on market conditions, trends in the NFT sector, and overall economic goals of the Kamikage ecosystem.
Operational Application
Regular Analysis and Adjustment: The supply of $KAGE will be analyzed and adjusted at regular intervals (e.g., monthly) using this formula.
Data-Driven Adjustments: Market data, including $KAGE's transaction volume and velocity, will be collected and analyzed to determine the appropriate supply adjustment.
Algorithm Implementation: The formula will be implemented through a smart contract or another automated system to ensure timely and accurate adjustments.
Goal
The primary goal of this mechanism is to maintain the purchasing power of $KAGE, ensuring it remains a valuable and stable asset within the Kamikage ecosystem.
By adjusting the supply in response to actual economic activity, we aim to prevent extreme price volatility, thereby protecting both the token's value and the interests of holders.
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