3.4.4 SOURCE Token Dynamics

SOURCE is the governance token of the ReSource protocol and will, as elaborated above, be used to underwrite debt accounts and pay network fees. For an overview of the SOURCE token supply and distribution, please refer to the chapter titled “SOURCE Governance Token” below.

The chart below depicts the flow of SOURCE between the market and natural monetary sinks within the ReSource Network.

The ReSource Network consumes SOURCE through: 1. The payment of fees by members, 2. Staking requirements imposed on underwriters. The ReSource Network emits SOURCE to the market via: 1. Staking rewards paid to underwriters, and 2. The purchasing of rUSD to maintain its peg to cUSD (or, alternatively: via reimbursing rUSD holders in the form of rUSD to SOURCE conversions as explained in chapter 3.4.1). Excess SOURCE, that are not currently required to monetarily stabilize rUSD, are sequestered within the network’s Reserve.

‌It is important to note that fee payments and staking requirements are both facilitated via SOURCE payments but denominated in rUSD. For example: a member might be obligated to pay a 3% transaction fee. This fee is denominated in rUSD, but will be paid in SOURCE. I.e, a 100 rUSD transaction will entail 3 rUSD fee, which will be paid in SOURCE.

If the current SOURCE price is SOURCE=3cUSD, one SOURCE will be consumed by the transaction. If the price of SOURCE drops to 1 SOURCE=1 cUSD, 3 SOURCE will be consumed by the transaction, etc.

Likewise, staking requirements are denominated in rUSD. If an underwriter is, for example, obligated to stake 20% of a credit line’s maximum overdraft amount, they would be required to stake 200 rUSD worth of SOURCE to underwrite a credit line of up to 1000 rUSD. I.e, 100 SOURCE in case that SOURCE price equals 1 SOURCE=2 rUSD. Consequently, if the price of SOURCE rises above 2 rUSD, the staking contract will pay out the excess SOURCE as staking rewards until the locked SOURCE equals 200 rUSD again. Vice versa, if the SOURCE price sinks below 2 rUSD, the staking contract will withhold staking rewards until locked SOURCE equals 200 rUSD again.

This way fee payments and staked SOURCE serve as a monetary buffer that smoothens the SOURCE supply and keeps it primarily influenced by the size and transaction volume of the ReSource Network.

For more information about SOURCE allocation, distribution, and supply, please refer to chapter 4.3 - “Initial SOURCE Allocation and Distribution”.