The Markets, The Protocol, and Group Psychology for Stakers and Minters

The face-value of MOVE will ultimately be determined by the market. If buying pressure is high, the price rises. If selling pressure is high, the price falls. The focus of each investor will rely upon the way in which the investor interacts with the protocol.

For Stakers

A Rising Pricing Price Floor

In traditional markets, price action is the determining factor of value. This is less so with MOVE since stakers’ equity will increase over time, creating a steadily falling cost basis. Therefore MOVE balance is more important than face-value price. Stakers should care more about longer-term growth than immediate price action since the protocol dictates a rising price floor for MOVE tokens.

A Falling Cost Basis

When investors stake their MOVE tokens, they will receive compounding rewards. Given that the protocol uses bond sales to create a rising price floor for MOVE dictated by the backing per MOVE token, over the long-term, price volatility is not a risk for stakers, since their cost basis will eventually fall below the backing per MOVE token.

For Minters

Minters will care more about the price of the MOVE token. This is because minting assures a static MOVE reward. Let’s assume that the price of MOVE is exactly $1 and a minter buys a bond of $100 worth of MOVE. Their static assured reward will be 100 MOVE. If the price of MOVE now increases to $2, the minter will gain $200 USD in MOVE. Therefore, minting is sensible in anticipation of increasing MOVE prices. Given that bonds are issued at a discount, minters will also profit if the price of MOVE remains the same. In essence, this acts similarly to staking in that Minters' MOVE holdings will increase over time as the bond matures.

Rising Prices

Periods of rising price are the most lucrative for Minters, since the discount they receive on tokens will be larger.

Stable Prices

However, it is still profitable to buy bonds during flat price action, since bonds will run at a discount to market prices. This will have the effect of increasing APYs and making market purchases more lucrative, thus bringing market prices up.

Falling Prices

In periods of price reduction, minting will be less profitable since the market price of MOVE could fall below the initial price that a minter purchases. Therefore it is more profitable to buy from the market during dips. This in turn, stabilises prices and allows bond prices to re-adjust and offer discounts once more.

How the protocol reacts to the markets

The price of MOVE will be more volatile at first. In periods of high demand, the protocol will be able to create higher staking rewards by selling more bonds. This in turn will bring in more investors seeking wealth creation, which increases demand further. This will create a feedback loop leading to the expansion of the DAO and an increasing MOVE price. Expansionary periods also allow the DAO to increase the liquidity held in its reserves.
In periods of low demand, staking and minting rewards will also fall. This is a natural part of price action - nobody in the Cryptocurrency space is a stranger to falling prices. When prices fall far enough, the protocol will use its reserves to buy MOVE and stabilise it. Given that this reserve intervention is a certainty, risk falls as the price falls since buying volume is anticipated.