Design Principles and Value Backing

Ensuring a $1 Value for MID

Core Principle:

MID’s value stability is anchored in the idea that each newly introduced MID is tied directly to stable collateral. Over time, most MID tokens enter the market through bonding (where participants exchange assets for MID at certain prices) and staking rewards (distributed to users who commit their MID to the protocol). Initially, MID is introduced in an open, equitable manner via the pMID → MID conversion. Together, these methods ensure MID’s value remains near $1, consistently backed by real assets and fine-tuned by AI agents.

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Initial Issuance: pMID → MID Conversion

MID enters circulation initially through a straightforward process:

$$1 \; pMID = 1 \; MID$$

Since pMID is backed by USDC pegged close to $1, each newly minted MID at this stage is inherently worth $1. This open, simple mechanism ensures no hidden allocations and establishes immediate trust and clarity.

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Long-Term Issuance: Bonding and Staking Rewards

As the protocol evolves, most new MID comes from two key sources:

1. Bonding: Participants deposit assets (e.g., DAI, USDC) to receive MID at a bond price ( B ). If ( B > 1 ), there is a premium:

   $$\text{Premium per MID} = B - 1$$

   For example, if ( B = 1.02 ), the premium is 0.02 USD per MID. These premiums accumulate in the treasury as surplus value.

2. Staking Rewards: Stakers earn MID over time as rewards. However, each MID issued as a staking reward must still be effectively backed by real value to maintain the $1 standard.

Since the treasury holds premiums collected from bonding, it can cover the value of newly issued staking rewards. If ( N_{stakeReward} ) MID are issued as rewards, the total accumulated premium should be at least equal to that amount in USD terms:

$$\sum \text{Premium} \geq N_{stakeReward}$$

This ensures that every additional MID (whether from bonding or staking rewards) does not dilute the asset backing, keeping its value near $1.

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AI-Driven Adjustments to Maintain $1

$AI agents continuously monitor the current MID price Pcurrent compared to the $1 target Ptarget = 1 . If there’s a deviation:

• If ( P_{current} < 1 ):

  Reduce MID supply (or buy back tokens):

  $$\Delta N = -k_3 \times (1 - P_{current})$$

  This nudges the price back up towards $1.

• If ( P_{current} > 1 ):

  Increase MID supply or selectively sell treasury assets:

  $$\Delta N = k_3 \times (P_{current} - 1)$$

  This brings the price down closer to $1.

Here, ( k_3 ) is a coefficient determined by AI agents, ensuring responsive, data-driven corrections.

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In Essence

• Initial Launch: The pMID-to-MID conversion ensures a fair, transparent, and $1-backed starting point.

• Bonding and Staking: Over time, MID’s growth comes from bonding (with premiums adding surplus value) and staking rewards, both tied to tangible assets and controlled parameters.

• AI Oversight: AI agents dynamically adjust parameters—APY, bonding discounts, supply—to correct deviations, ensuring MID hovers around $1.

This multifaceted approach—simple initial issuance, premium-backed expansion, and continuous AI-led tuning—secures MID’s stable value foundation for the long term.