Minting of new Fluzcoins
Fluzcoin coins are created at the ICO and on a continuous basis after that through issuance to the holders of Fluzcoin.
This issuance takes two distinct ways or tranches:
- Holders of Fluzcoin receive proof of stake which means they get new Fluzcoin automatically issued into their wallets in proportion to their holdings. The level of proof of stake reflects the value creation of Fluzcoin, the higher the market cap of Fluzcoin becomes, the more proof of stake holders of Fluzcoin receive. proof of stake are paid at frequent intervals (more frequent than monthly) and the level of proof of stake is set by the EUNOMIA Foundation.
- The EUNOMIA Foundation also issues new Fluzcoin to the market in exchange for other currencies; the purpose of this second channel is to enable the Foundation to cover the running costs of operations of the Fluzcoin systems as well as to maintain and grow the Fluzcoin Reserve. This is issuance is subject to a strict and transparent ruleset outlined below along with more details on the Foundation and the Reserve.
The effect of automatically issuing new Fluzcoin is similar to printing of new money in fiat currencies, it creates an inflationary pressure on prices. But with a crucial difference: the gains from creating new Fluzcoin are handed directly to the holders of Fluzcoin and therefore there is no erosion of purchasing power for holders of Fluzcoin due to this sort of inflation. To the contrary: holders of Fluzcoin participate in the value created through the adoption of Fluzcoin as a retail currency.
By setting up this issuance, the Fluzcoin system can regulate the development of prices of goods and services as expressed in Fluzcoin. And this in turn allows the Fluzcoin system to steer its exchange rate vis-a-vis other currencies.
And splitting the issuance into these two tranches enables EUNOMIA Foundation to both share out the gains of higher demand for Fluzcoin to the holders of Fluzcoin (the first tranche) and to generate proceeds with which to pay for its expenses and to build up its reserve. The Fluzcoin Reserve is created at the conclusion of the ICO by part of the proceeds, and it is further built up — as well as replenished after open market interventions — by the subsequent coin offering (SCO) of Fluzcoin on the open market (second tranche). The non-Fluzcoin currency that this yields to EUNOMIA Foundation is used for:
- The running of the operational systems of the Fluzcoin system, mainly the server cost, which makes holding and transaction Fluzcoin transaction cost free for all users
- The running of the foundation and affiliated costs
- The remainder is fully directed to the foreign currency reserves of the EUNOMIA Foundation
The Reserve initially targets an eventual reserve to outstanding Fluzcoin value ratio of 25%. This means that as long as the reserve ratio is below this threshold the weight of the second tranche in all issuance will on average be larger than the threshold value and will be lower in the reverse case. In the steady state this means that about 75% of new Fluzcoin issuance goes directly to holders of Fluzcoin in the form of the first tranche. The weight of the second tranche is restricted to not surpass 50% so that at least half of the new Fluzcoin issuance is proof of stake payments to Fluzcoin holders.
In order to prevent bad faith actors taking advantage of the sharing of gains, these gains are not shared immediately with holders of Fluzcoin but shared in backloaded instalments over a time period of about six months. On a technical level therefore new Fluzcoin is thus initially always issued through the second channel while the share out proportion of the associated inflows of foreign currency are subsequently, over the course of about half a year, used to buy back Fluzcoin and concurrent redistribution of the bought-back Fluzcoin to Fluzcoin holders.
It is important to note that attacks on the exchange rate of Fluzcoin are self-defeating. Fluzcoin does not maintain a fixed peg with other currencies, it manages the volatility down to acceptable levels (vis-a-vis currencies like BTC and ETH our models suggest a level of daily USD volatility that is 90–95% lower); and this means that high volume sudden purchases slightly and temporarily push up the Fluzcoin price and vice versa. This means speculators that quickly move in and out in large quantities buy high and sell low.
Participating of the open market operations:
Here is a short video on the EUNOMIA algorithm:
If you want to find out more about Fluzcoin and technologies behind it — you are welcome to read our whitepaper.
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