Price Stability Mechanisms

A price stability mechanism is a system or set of rules that are designed to keep prices reflective of the real estate portfolio value. Price stability is an important aspect of real-world asset-backed tokens to be used in Defi. The ability to maintain a stable price makes a token safe to use in Defi protocols as collateral without the risk of unjust liquidation.

The gypsy protocol is designed with these price stability mechanisms to keep the token’s on-chain price representative of the value of the real estate portfolio.

Gypsy purchasing rules

When the Gypsy price is above the backing price, this will cause new Gypsy to be minted and purchased. This will cause the price of GPSY to fall toward the backing price.

When the Gypsy price is below the backing price, this will cause the newly purchased Gypsy to come from a decentralized exchange. This will cause the price of GPSY to rise toward the backing price.

Learn more about how GPSY is minted here

One token to back all homes

The use of one token to back all of the homes causes the trading volume to be concentrated in a singular asset. Higher volume will result in better price discovery and help GPSY maintain the backing price.

Daily Rental Income

Gypsy distributes its rental income linearly over the month to all LGPSY holders. In the case that investors are withdrawing their GPSY from LGPSY in order to sell, it will increase the APY of the protocol for those users who are still staked. This APY increase should incentivize investors to buy and stake GPSY.

Arbitragers

In the Gypsy Protocol, Arbitragers are market participants that help GPSY maintain its Backing Price: they sell GPSY when the market price is above the Backing Price, and buy GPSY when the market price is below the Backing Price.