There are different mechanisms in place for ensuring that members of the PRIMARY community can contribute to the platform without worrying about the stability of their assets. First of all PRIMARY tokens’ value is regulated to prevent short term market volatility from effecting its price. More importantly, the network has a ‘stable coin’ in the form of the GRAVITY token which is instrumental for facilitating transactions in the real world. Let us take a look at the benefits of stable coins and how such a token strengthens our project.
What is a stable coin?
A ‘stable coin’ refers to a cryptocurrency whose value is pegged to a fiat currency such as the US dollar or another asset in order to reduce price fluctuation. In general the price stability of such a coin is managed by controlling the supply of an asset backing the currency to keep the value of the coin fixed at a certain price. It can also be maintained by ensuring that each token is backed up by a certain asset kept in reserve.
Why use stable coins?
Stable coins are commonly used by cryptocurrency exchanges to maintain a sustainable level of liquidity. For example, in many countries there are restrictions on the conversion of cryptocurrency to fiat currency- and vice versa. In such cases a stable coin can act as a replacement for fiat currency. The advantage is that by converting a regular cryptocurrency token to a stable coin pegged to a widely trusted currency, we can make it far easier to convert the token into fiat as there are physical reserves of the currency backing the stable coin.
This is essentially what occurs on PRIMARY’s on the basis of the internal exchange mechanism which converts the network’s regular token into a stable coin in order to purchase goods and services on the network.
Introducing the GRAVITY token
The GRAVITY (GRY) token is the PRIMARY platform’s stable coin, with every GRY token backed up by a US Dollar kept in reserve to maintain the token’s value. Reducing volatility is imperative for the GRY token as it will be redeemable for goods and services at all rent24 locations, as well as by all alliance partners.
Any buy orders submitted to the internal exchange of the platform will be made using GRY tokens, which are a substitute for fiat currency on the network.
Therefore any price fluctuation would be detrimental to the stability of the PRIMARY ecosystem, and GRY tokens will only be minted once a user transfers fiat currency to the platform.
Pricing mechanism for the PRIMARY token
While its price will ultimately be determined by the market, there are also measures in place to stabilise the price of the PRY token. The platform’s pricing oracle is designed to reduce price volatility by constantly updating the smart contract governing token exchanges. It will do this by looking at the price of the PRY token on several exchanges and using the average value. Smoothing functions will also be implemented, allowing users to avoid short term market volatility by making the price of PRY follow general trends rather than respond to any short term anomalous behaviour in the market.
The connection between PRIMARY and GRAVITY coin
One of the biggest issues facing blockchain based payment solutions for real world products is the need to constantly evaluate prices. For example, highly price volatile cryptocurrencies require merchants to constantly refer to the value of a token in terms of a fiat currency to set the price for goods and services.
In fact, a chocolate which is sold for 5 price volatile tokens on one day may be worth 10 tokens the very next day if the cryptocurrency depreciates in value.
On the PRIMARY platform this extra effort on the part of businesses will not be required as vendors can set a fixed price for products in terms of GRY tokens, with the knowledge that the token is backed by a trusted asset. Additionally, the value of PRY tokens will not change very rapidly, but will see changes occur gradually.
Stay in touch with PRIMARY
For further information regarding token distribution and the team behind the project visit PRIMARY. Or get the latest announcements by joining our email list.
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