Why do we need MOVE DAO in the first place?

On top of Launchpad, AptosLaunch is doing much more to power the MOVE Ecosystem - introducing the MOVE Ecosystem Fund (3,3) - MOVE DAO. Yet we can do that with dollar-pegged stablecoins. Users are comfortable with transacting using stablecoins knowing that they hold the same amount of purchasing power today vs. tomorrow. But this is a fallacy. Constant rate hikes have caused the depreciation of dollar also means a depreciation of these stablecoins - reducing your purchasing power both in real life and in the metaverse.

MOVE DAO aims to solve this by creating a non-pegged stablecoin called MOVE. By focusing on supply growth rather than price appreciation, MOVE DAO hopes that MOVE can function as a currency that is able to hold its purchasing power regardless of market volatility - both in real life and in the metaverse - all powered by the MOVE ecosystem.

Is MOVE a stablecoin?

No, MOVE is not a stablecoin. Rather, MOVE aspires to become an algorithmic reserve currency backed by other decentralized assets - it utilises fractional treasury reserves to extract intrinsic value. Similar to the idea of the gold standard, MOVE provides free-floating value its users can always fall back on.​

MOVE is backed, not pegged.

Each MOVE is backed by 1 USDT, not pegged to it. Because the treasury backs every MOVE with at least 1 USDT, the protocol would buy back and burn MOVE when it trades below 1 USDT. This has the effect of pushing MOVE price back up to 1 USDT. MOVE could always trade above 1 USDT because there is no upper limit imposed by the protocol. Think pegged == 1, while backed >= 1.

You might say that the MOVE intrinsic value is 1 USDT. We believe that the actual price will always be 1 USDT + premium, but in the end that is up to the market to decide. It is MOVE DAO's intention to back MOVE with metaverse and blockchain gaming projects - all powered by the MOVE ecosystem, giving it intrinsic value for use in the metaverse.

How does it all work?

MOVE DAO sells bonds in the β€˜Mint Page’ to investors at a discount to market prices. The profit from these bonds backs our token with real value and is used to mint new MOVE tokens using real value, allowing us to offer high APYs which incentivises long-term staking.

Over time, the Protocol uses it's bonds to gain an increasing share of its own liquidity and expand it. This means that the Protocol can guarantee the backing of tokens.

What is the deal with (3,3) and (1,1)?

3,3 and 1,1 are some of the labels which give to certain actions with regards to Game Theory.

Game Theory is the study of mathematical models which can be used to determine the advantage or disadvantage of specific choices in a given scenario. In the case of MOVE DAO, we use it to describe the benefits and drawbacks of the various ways in which users can interact with the Protocol.

(3,3) is the idea that, if everyone cooperated in MOVE DAO, it would generate the greatest gain for everyone (from a game theory standpoint). Currently, there are three actions a user can take:

Β· Staking

Β· Minting

Β· Selling

Staking and minting are considered beneficial to the protocol, while selling is considered detrimental. Staking and selling will also cause a price move, while minting does not (we consider buying MOVE from the market as a prerequisite of staking, thus causing a price move). If both actions are beneficial, the actor who moves price also gets half of the benefit (+1). If both actions are contradictory, the bad actor who moves price gets half of the benefit (+1), while the good actor who moves price gets half of the downside (-1). If both actions are detrimental, which implies both actors are selling, they both get half of the downside (-1).

Therefore, an ideal scenario would be for all users to Stake - this allows the Protocol to build reserves and offer more attractive APYs whilst also allowing users to increase their stake and reduce their cost basis.

Β· If we both stake (3, 3), it is the best thing for both of us and the protocol (3 + 3 = 6).

Β· If one of us stakes and the other one bonds, it is also great because staking takes MOVE off the market and put it into the protocol, while minting provides liquidity and USDT for the treasury (3 + 1 = 4).

Β· When one of us sells, it diminishes effort of the other one who stakes or bonds (1 - 1 = 0).

Β· When we both sell, it creates the worst outcome for both of us and the protocol (-3 - 3 = -6).

Why is PCV important?

As the protocol controls the funds in its treasury, MOVE can only be minted or burned by the protocol. This also guarantees that the protocol can always back 1 MOVE with 1 USDT. You can easily define the risk of your investment because you can be confident that the protocol will indefinitely buy MOVE below 1 USDT with the treasury assets until no one is left to sell. You can't trust the FED but you can trust the code.

As the protocol accumulates more PCV, more runway is guaranteed for the stakers. This means the stakers can be confident that the current staking APY can be sustained for a longer term because more funds are available in the treasury.

Why is the market price of $MOVE so volatile?

There is one dominant reason: we are still young.

A large amount of discussion has centered around the current price and expected a stable value moving forward. The reality is that these characteristics are not yet determined. The network is currently tuned for expansion of MOVE supply, which when paired with the staking, minting, and yield mechanics of MOVE DAO, result in a fair amount of volatility.

MOVE could trade at a very high price because the market is ready to pay a high premium to capture a percentage of the current market capitalization. However, the price of MOVE could also drop to a large degree if the market sentiment turns bearish. We would expect significant price volatility during our growth phase so please do your own research whether this project suits your goals.

Over time, the liquidity pool will grow, and therefore price action will decrease, leading to a more stable market price for $MOVE. This will allow investors to confidently stake large sums of money without needing to worry about volatility as much.

What is the point of buying it now when MOVE trades at a very high premium?

When you buy and stake MOVE, you capture a percentage of the supply (market cap). This is because your staked MOVE balance also increases along with the circulating supply. The implication is that if you buy MOVE when the market cap is low, you would be capturing a larger percentage of the market cap.

Once MOVE is staked, your balance will increase with the circulating supply, meaning, even if you miss out on a lower price, your MOVE balance will increase due to the staking protocol. Therefore, you will be generating a staking income, reducing your risk, even at a higher price.

What is a rebase?

Rebase is how the mechanism by which the Protocol rewards stakers. When new MOVE are minted by the protocol using bond profits, a large portion of it goes to the stakers. Because stakers only see staked MOVE balance instead of MOVE the protocol utilizes the rebase mechanism to increase the staked MOVE balance so that 1 staked MOVE is always redeemable for 1 MOVE.

What is reward yield?

Reward yield is the percentage by which your staked MOVE balance increases on the next epoch. It is also known as rebase rate. You can find this number on the MOVE DAO staking page.

What is APY?

APY stands for annual percentage yield. It measures the real rate of return on your principal by taking into account the effect of compounding interest. In the case of MOVE DAO, your staked MOVE represents your principal, and the compound interest is added periodically on every epoch (8 hours) thanks to the rebase mechanism.

One interesting fact about APY is that your balance will grow not linearly but exponentially over time! Assuming a daily compound interest of 2%, if you start with a balance of 1 MOVE on day 1, after a year, your balance will grow to about 1377.

How is APY calculated?

The APY is calculated from the reward yield (a.k.a rebase rate) using the following equation:

APY = ( 1 + rewardYield )^{1095}

It raises to the power of 1095 because a rebase happens 3 times daily. Consider there are 365 days in a year, this would give a rebase frequency of 365 * 3 = 1095.

Reward yield is determined by the following equation:

rewardYield = MOVE_{distributed} / MOVE _{totalStaked}

The number of MOVE distributed to the staking contract is calculated from MOVE total supply using the following equation:

MOVE_{distributed} = MOVE_ {totalSupply} \times rewardRate

Note that the reward rate is subject to change by the protocol.

Are high APY sustainable?

APY relies on the sale of USDT bonds in order to mint new MOVE tokens. If sufficient bonds are sold, then high APY rates are sustainable. If the protocol aims for 10,000% APY, and 10,000 MOVE tokens are staked, 200 MOVE tokens need to be minted daily in order to achieve the APY; (Roughly 2% growth a day). If there are at least MOVE MOVE tokens brought into the protocol from bond sales, the APY is sustainable.

The APY can be high due to compounding interest.

Why does the price of MOVE become irrelevant in the long term?

As illustrated above, your MOVE balance will grow exponentially over time thanks to the power of compounding. Let's say you buy a MOVE for $400 now and the market decides that in 1 year time, the intrinsic value of MOVE will be $2. Assuming a daily compound interest rate of 2%, your balance would grow to about 1377 MOVE by the end of the year, which is worth around $2754. That is a cool $2354 profit! By now, you should understand that you are paying a premium for MOVE now in exchange for a long-term benefit. Thus, you should have a long time horizon to allow your MOVE balance to grow exponentially and make this a worthwhile investment.

What will MOVE intrinsic value be in the future?

There is no clear answer for this, but the intrinsic value can be determined by the treasury performance. For example, if the treasury could guarantee to back every MOVE with 100 USDT, the intrinsic value will be 100 USDT. It can also be decided by the future DAO. For example, if the DAO decides to raise the price floor of MOVE, its intrinsic value will rise accordingly. MOVE DAO started with the intention of becoming a reserve currency protocol that is backed by Metaverse and Blockchain gaming projects, so our treasury will hold appropriate projects decided by the DAO.

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