Automatically Adjusted Supply
What is AAS?
Quota Network provides a full-range DeFi ecosystem, all through an equilibrium seeking synthetic currency that has an Automatically Adjusted Supply derived from the current level of the S&P 500 Index Value. The reference point for its EP(equilibrium-price) is derived from the current level of the S&P 500 Index value. The index component companies are admitted to the index through committee evaluation with the aim of capturing the corporate performance of large US corporations as reflected in stock price. In this way 4.0V2 can be viewed as a token that moderates inflationary pressures, where inflation benchmarks are determined by the health of the global economy as reflected in the performance of ‘Corporate America’.
Price reaction is not guaranteed. Ultimately only trading action will determine the resultant price action.
Equation 1.1: AAS Geometric Adjustment Factor
4.0V2’s price action relative to the S&P 500 Index determines a geometric factor of adjustment. The geometric factor is determined as follows:
Variable Definition for the explanation:
Our protocol systematically logs the price action of 4.0V2 over 1 hour intervals over a 24 hour period to determine the degree of deviation from the S&P 500. This deviation data is then processed in our Automatically Adjusted Supply (“AAS”) algorithm, to determine the change to be affected in the token supply. The arithmetic mean is then calculated as follows:
AAS System Procedure (How does it occur?)
The Quota’s AAS is our proprietary algorithmic token supply moderator. Through token supply increases or decreases, price action is induced toward equilibrium. 4.0V2’s price action relative to the S&P 500 Index determines a geometric factor of adjustment. Automatic Supply Adjustment AAS occurs once a day at 12am UTC.
M.A.L.(Maximum Adjustment Limit):
In order to prevent excessive inflationary or deflationary effects in regulating the token supply, Quota has placed systemic limitations in each of the adjustment cases as follows:
Positive AAS : 7% MAX Negative AAS : 3.5% MAX
Positive AAS Algorithm
If 4.0V2 is trading relatively higher than the S&P 500, it is indicating that the currency is relatively over stimulated relative to the greater economy, and therefore the total supply of 4.0V2 will increase in proportion to its deviation from the benchmark. The reduction in scarcity should, all else constant, have a subduing effect on the price. ** Ultimately price discovery is market determined. This is therefore not a representation of future price action.
Negative AAS Algorithm
If 4.0V2 is trading relatively lower than the S&P 500, it is indicating that the currency is relatively under-stimulated relative to the greater economy, and therefore the total supply of 4.0V2 will decrease in proportion to its deviation from the benchmark.The increase in scarcity should, all else constant, have a stimulating effect on the price. ** Ultimately price discovery is market determined. This is therefore not a representation of future price action.
AAS Scenario for both situation
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