Each cycle on the VuFi protocol lasts for approximately an hour, after which the supply expands, contracts, or stays the same depending on the value of the VuFi coin. This shorter cycle increases the frequency of expansions or contractions, thus providing more minting and burning opportunities for traders. The time period of the cycle may change in the future if the community votes to do so.
These supply expansions or contractions are called rebases. VuFi is an algorithmic stable coin that is roughly stable at the inflation rate of the US Dollar due to automatic adjustment of issuance amount and partial collateral system. The rebase mechanism will be less volatile depending on the cumulative number of new issues.
The VuFi protocol rebase system is designed to rebase every 1 hour. The model derives from the goal to create a system that is fair to most users. Our method ensures that there is no unequal rebase distribution due to the difference in time zones, for example. Holders in all parts of the world rotate in experiencing a rebase in their peak hours. Thus, creating a fair opportunity of trading and arbitrage for all users globally.
Although the period of the cycle is currently one hour, the token owners may vote to change it. Furthermore, these expansions and contractions are calculated on the basis of the time-weighted average method. In the case of expansion, there would be minting of new bonds and in case of contractions, there would be burning opportunities. If that sounds like the typical process, read on to know what makes it different from the rest.