As an example, let's say the FLOAT target price was $1.50 and the market price was $2.00.
- In this instance, new FLOAT will be offered onto the market at decreasing price increments (starting at $2.00 and moving down to $1.50).
- Logically, arbitrageurs will buy enough of the new FLOAT we are minting to bring the price closer to target (assuming a profit can be made by buying new FLOAT and selling at a higher price on the market).
- When buying FLOAT, arbitrageurs pay us in a blend of ETH and BANK. In general, they pay $1.50's worth in ETH and the rest (market price - target price) in BANK.
- The ETH received is stored in the Basket, to be used to support the FLOAT price in times of a lack of demand.
- The BANK is then burned immediately, providing positive price pressure for BANK holders.
- The blend of ETH/BANK depends on whether the Basket has a surplus or deficit at the time of expansion.