Strong price floor stability

Money Protocol’s monetary policy provides liquidity at a 0% annual interest and marginally low, near-free issuance costs. The issued BPD tokens are fully redeemable against the underlying BTC collateral at the face value of the redeemed BPD minus a Redemption fee, and this direct price stability mechanism results in a price floor of $1 for BPD. Arbitrageurs are incentivized to buy BPD when the price falls below $1 as they can redeem the BPD for BTC at face value and immediately sell the BTC at a higher dollar price than the current value of the redeemed BPD. This mechanism helps restore the peg, and the Redemption Fees are designed to enable arbitrage gains whenever the peg is broken.