Pre-CHAOS is an option to buy $CHAOS at the current floor price
$prCHAOStokens can be thought of as non-expiring call options with a dynamic strike price: the current floor price of $CHAOS.
$CHAOS's value can never go beneath the floor, the
$prCHAOStokens are always "in the money." They allow the holder to purchase
$CHAOSat its lowest possible price.
$CHAOSstaking rewards are paid in
$prCHAOStokens. The purpose of this method is to balance the competing goals:
- Rewarding stakers with an attractive yield
- While remaining sustainable with yield rates for the longterm
$prCHAOSminting is neutral to the protocol's health since the only way to convert
$prCHAOSinto $CHAOS is by paying the floor price's worth of cash into the protocol reserves. In this way, the reserves maintain their backing of
This reward mechanism is different from so-called "re-base currencies" which pay rewards in the native value token. Minting & emitting the main collateralized tokens dilutes their value, and in the case of reserve currencies, weakens their backing since more tokens are being created without money coming into the reserves. The
$prCHAOSmodel allows for sustainable yields that benefit the protocol & stakers in the same gesture.