Advanced Mechanics

i. ISC Peg Mechanism

Scenario A. Where ISC Market Price is Higher than ISC Target Price

Where the ISC Market Price is higher than the ISC Target Price, the ISC Issuer issues more loans of ISC to the ISC Reserves, which then have the incentive to sell ISC into the Digital Asset Market, thereby increasing the amount of ISC in circulation and bringing the price back down.

Scenario B. Where ISC Market Price is Lower than ISC Target Price

Where the ISC Market Price is lower than the ISC Target Price, the ISC Issuer recalls loans of ISC from the ISC Reserves, which then must buy ISC from the Digital Asset Market to repay the ISC Loan, thereby decreasing the amount of ISC in circulation and bringing the price back up.

ii. Continuous Rebalancing

Continuous Rebalancing (ISC Reserve Basket Daily Rebalance) is the incremental process of adjusting the precise quantities of each asset within the ISC Reserve Basket on a daily basis. This ensures that the ISC Reserve Basket maintains its alignment with the community's desired asset allocation.

iii. ISC Reserve Incentive Structure

The ISC Reserve Basket is subject to a daily reduction at a rate of 0.5% per annum, which in turn reduces the assets required by a small amount. The assets that are surplus to the requirements of the ISC Reserve Basket are used to cover operating costs and pay for fees associated with buying and selling assets.

The community will review and adjust this incentive structure to ensure it provides just enough financial motivation for the ISC Reserves to continue their work and cover their operating expenses.

iv. ISC Issuer Interest Rate

To ensure the ISC Project's longevity over the coming decades or even centuries, it must secure a method of funding its operations beyond IGT sales. This is the rationale behind the ISC Issuer charging an interest rate of 0.0~1.0% on ISC Loans, although initially no interest will be charged. This also eliminates the need to print more IGT to cover operational costs. Unlike other crypto projects that expand their governance token supply for funding, the ISC Team will never inflate the supply of IGT as it isn't necessary.