The OMS supply adjustment function is similar to the rebasing mechanisms used by other elastic supply currencies. The OMS token is designed to be pegged to USD, with fluctuations in supply used to moderate price inflation/deflation.
A key differentiator for OMS is the capability to generate additional yield for investors immediately, this yield is in addition to inflation through the token demand and elastic supply adjustments.
The token economics have been designed such that at initiation two pools are created. This dual pool structure provides for a mechanism to generate immediate yield for liquidity providers.
Price thresholds (lower and upper) provide the basis for the supply adjustments.
• A price higher than the upper price threshold results in supply inflation
• A price lower than the lower price threshold results in supply deflation
• A price in between the thresholds is determined to be in parity and will result in no supply adjustment.
The adjustment to supply is calculated as:
%Adjustment = (Current Price – Base Price * 100) / 10
Holders of OMS own a percentage of the overall supply and supply adjustments are applied to all wallets including OMS Tokens held by Liquidity Providers and the OMS Treasury. This is important to note as supply adjustments to the Treasury form the basis of the yield generation function of the OMS protocol.