Today, we’d like to introduce the core element of Xank’s Stable Pay mechanism, which is the Xank Reserve. We hope to shed more light on how the Xank Reserve will operate to enable better, price stable transactions.
Xank is unique in that the cryptocurrency itself can fluctuate in price, but it still can perform as a stablecoin. In other words, the market dictates the price of the Xank coin, meaning it can go up or it can go down. Just like bitcoin or Ripple. But when a person owns Xank and wants to send or receive Xank, the Stable Pay feature allows the sender and receiver to conduct transactions that preserve the intended fiat value of the transaction.
Why don’t we take a closer look at how the system works, starting with the Xank Reserve. First, the Xank Reserve is a decentralized autonomous mechanism that holds an initial 15% of the total Xank supply. The coins in the Xank Reserve will be used to adjust the number of coins held by the recipient of a Stable Pay transaction. In some scenarios, the Xank Reserve will give some coins to the user, while in other situations the Reserve will take from the user.
How it Works
When a Stable Pay transaction occurs, the Xank protocol simply ensures that the fiat amount that I send in Xank tokens will not deviate from its initial amount. For example, if I send you $100 in Xank, then the $100 stays at $100 during the lifetime of the transaction, no matter the price fluctuation.
Let’s take a look at a few examples.
Price Increase Scenario
Person A sends Person B $100 in Xank tokens through a Stable Pay transaction. Ten days later, the price of Xank has doubled. Then does Person B hav $200 in Xank coins?
In a normal transaction this person would, but in a Stable Pay transaction, that $100 is maintained. Because the price doubles, the Xank Reserve automatically absorbs half of Person B’s coins, thus keeping his Xank balance in terms of dollars at $100.
Price Decrease Scenario
What if the opposite happens and the price of Xank drops? Let’s assume Person B sends Person A $100 in Xank. Ten days later, Xank’s price falls by 50%.
While the price has been cut in half, the $100 is maintained with the help of the Xank Reserve. To make up for the value lost in fiat terms, the Xank Reserve deposits $50 worth of Xank to Person A’s wallet, thus keep Person A’s balance at $100.
The Xank Reserve functions as an intermediary that guarantees a fiat value, even if Xank’s price increases or decreases. In the future, when Xank’s Stable Pay feature is live, we will all be able to participate in the magic that is Stable Pay.319