# FAQ

*

## Why do we need Gryphon DAO in the first place?

Dollar-pegged stablecoins have become an essential part of crypto due to their lack of volatility as compared to tokens such as Bitcoin and Ether. Users are comfortable with transacting using stablecoins knowing that they hold the same amount of purchasing power today vs. tomorrow. But this is a fallacy. The dollar is controlled by the US government and the Federal Reserve. This means a depreciation of dollar also means a depreciation of these stablecoins.

Gryphon Dao aims to solve this by creating a non-pegged stablecoin called GRP. By focusing on supply growth rather than price appreciation, Gryphon Dao hopes that GRP can function as a currency that is able to hold its purchasing power regardless of market volatility.

## Is $GRP a stablecoin?

No, $GRP is not a stablecoin. Rather, $GRP aspires to become an algorithmic reserve currency backed by other decentralized assets. Similar to the idea of the gold standard, $GRP provides free-floating value its users can always fall back on, simply because of the fractional treasury reserves $GRP draws its intrinsic value from.

## What is Magic Internet Money (MIM)? <a href="#ohm-is-backed-not-pegged" id="ohm-is-backed-not-pegged"></a>

Magic Internet Money (**MIM**) is a stablecoin backed by interest bearing tokens issued by [**abracadabra.money**](https://abracadabra.money/)**!**&#x20;

![](https://861161056-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FrujB0dsa2lHRmyiiaCGR%2Fuploads%2FBJj6af0qauSNCYpctztR%2Fmimlogopng.png?alt=media\&token=765f3842-8577-499e-9014-0a3be1276c2b)

**MIM** is native of the Ethereum Ecosystem and bridged to Avalanch&#x65;**! The place with the highest liquidity to buy MIM on Avalanche Network is on** [**Trader Joe**](https://www.traderjoexyz.com/#/trade) **using the AVAX-MIM Pair!**&#x20;

The MIM address on Avalanche is [**0x130966628846BFd36ff31a822705796e8cb8C18D**](https://cchain.explorer.avax.network/tokens/0x130966628846BFd36ff31a822705796e8cb8C18D/).

## **GRP** is backed, not pegged. <a href="#time-is-backed-not-pegged-1" id="time-is-backed-not-pegged-1"></a>

Each **GRP** is backed by 1 **MIM**, not pegged to it. Because the treasury backs every **GRP** with at least 1 **MIM**, the protocol would buy back and burn **GRP** when it trades below 1 **MIM**. This has the effect of pushing **GRP** price back up to 1 **MIM**. **GRP** could always trade above 1 **MIM** because there is no upper limit imposed by the protocol. Think pegged == 1, while backed >= 1.

You might say that the **GRP** floor price or intrinsic value is 1 **MIM**. We believe that the actual price will always be 1 MIM + premium, but in the end that is up to the market to decide.

## Why is Protocol Controlled Value (PCV) Important?

As the protocol controls the funds in its treasury, **GRP** can only be minted or burned by the protocol. This also guarantees that the protocol can always back 1 **GRP** with 1 **MIM**. You can easily define the risk of your investment because you can be confident that the protocol will indefinitely buy **GRP** below 1 **MIM** with the treasury assets until no one is left to sell. You can't trust the FED but you can trust the code.

As the protocol accumulates more PCV, more runway is guaranteed for the stakers. This means the stakers can be confident that the current staking APY can be sustained for a longer term because more funds are available in the treasury.

## What is the point of buying it now when GRP trades at a very high premium? <a href="#what-is-the-point-of-buying-it-now-when-time-trades-at-a-very-high-premium" id="what-is-the-point-of-buying-it-now-when-time-trades-at-a-very-high-premium"></a>

When you buy and stake **GRP** , you capture a percentage of the supply (market cap) which will remain close to a constant. This is because your staked **GRP** balance also increases along with the circulating supply. The implication is that if you buy **GRP** when the market cap is low, you would be capturing a larger percentage of the market cap.

## What is reward yield?

Reward yield is the percentage by which your staked **GRP** balance increases on the next epoch. It is also known as *rebase rate*. You can find this number on the Gryphon Dao staking page.

## What is APY? <a href="#what-is-apy" id="what-is-apy"></a>

**APY** stands for annual percentage yield. It measures the real rate of return on your principal by taking into account the effect of compounding interest. In the case of Gryphon Dao , your staked **GRP** represents your principal, and the compound interest is added periodically on every epoch thanks to the rebase mechanism.

One interesting fact about **APY** is that your balance will grow not linearly but exponentially over time! Assuming a daily compound interest of 2%, if you start with a balance of 1 **GRP** on day 1, after a year, your balance will grow to about 1377.&#x20;

![](https://gblobscdn.gitbook.com/assets%2F-MV4hwONledQK5nEDaUc%2Fsync%2F585854ca21f006875c918ba2aed711730f71284a.png?alt=media)

## How is APY Calculated? <a href="#how-is-the-apy-calculated" id="how-is-the-apy-calculated"></a>

The APY is calculated from the reward yield (a.k.a rebase rate) using the following equation:

$$
APY = ( 1 + rewardYield )^{1095}
$$

It raises to the power of 1095 because a rebase happens 3 times daily. Consider there are 365 days in a year, this would give a rebase frequency of 365 \* 3 = 1095.

Reward yield is determined by the following equation:

$$
rewardYield = GRP\_{distributed} /GRP
\_{totalStaked}
$$

The number of GRP distributed to the staking contract is calculated from GRP total supply using the following equation:

$$
GRP\_{distributed} =G RP\_
{totalSupply} \times rewardRate
$$

Note that the reward rate is subject to change by the protocol.

## Why does the price of GRP become irrelevant in long term? <a href="#why-does-the-price-of-time-become-irrelevant-in-long-term" id="why-does-the-price-of-time-become-irrelevant-in-long-term"></a>

As illustrated above, your **GRP** balance will grow exponentially over time thanks to the power of compounding. Let's say you buy a **GRP** for $400 now and the market decides that in 1 year time, the intrinsic value of **GRP** will be $2. Assuming a daily compound interest rate of 2%, your balance would grow to about 1377 **GRP** by the end of the year, which is worth around $2754. That is a cool $2354 profit! By now, you should understand that you are paying a premium for **GRP** now in exchange for a long-term benefit. Thus, you should have a long time horizon to allow your **GRP** balance to grow exponentially and make this a worthwhile investment.

## What will be GRP intrinsic value in the future? <a href="#what-will-be-time-intrinsic-value-in-the-future" id="what-will-be-time-intrinsic-value-in-the-future"></a>

There is no clear answer for this, but the intrinsic value can be determined by the treasury performance. For example, if the treasury could guarantee to back every GRP with 100 **MIM**, the intrinsic value will be 100 **MIM**. It can also be decided by the future DAO. For example, if the DAO decides to raise the price floor of **GRP**, its intrinsic value will rise accordingly.

## &#x20;<a href="#what-is-a-rebase" id="what-is-a-rebase"></a>
