The ABI token itself holds no intrinsic value. The protocol does work to ensure the token has a minimum viable value to be useful. The intrinsic value (current) of OHM is 1 DAI.
All value for the ABI is derived from the RFV of the current protocol treasury and utility of the ABI token. ABI is a utility token and as part of its utility the treasury needs to ensure that ABI holds enough value to allow cross chain transactions, lending pools, accreditation issuing and other services to function. Please see how the treasury is utilised.
It should be assumed at all times that the backing value of ABI treasury is:
( (Total OHM Holdings Value + Total Stable Holdings Value)/ Total ABI Circulating )
The RFV of Abachi is calculated as:
((Total OHM Holdings + Total Stable Holdings)/ Total ABI Circulating ) * 0.7
The RFV is a conservative effort to ensure market price fluctuations do not affect the value.
The protocol as part of preserving its value will automatically try and rebalance itself.
The protocol DOES NOT go back and try to buy the ABI in the market to try and save its RFV, it will always try and buy back OHM or discount new minting of ABI to attract more DAI.
The price of ABI may very well trade at $0 while the RFV is at $100. In such a case, Abachi will allow people to sell the ABI back to the treasury at RFV to lend price support because the price is below the RFV. This ABI will be bought and burnt. Abachi will use either its OHM or Stables backing to complete these purchase backs. This stabilizes the price of ABI to function and removes any supply from circulation that is not needed anymore.
The protocol will put in place limits and thresholds for buy backs, to ensure there is no attempts to force the price down using the buy back. The thresholds will be announced at a later stage while we build out the protocol, however we have proposed 1% of outstanding supply per day (3 epochs) be bought back this way to allow the protocol and ABI price to settle in volatile markets. This is important for the protocol to function as most core services rely on these fees to be estimated.
This is an important concept to grasp and understand which is different from other DAOs that manage a treasury against value appreciation.
The buy back and burn mechanism lends security to the protocol by ensuring none of our lending pools, wallets, or any other services mentioned in Abachi core are affected in anyways and can keep functioning during market volatility.
The mechanics may be changed in the future as we research and build out the protocol.