> For the complete documentation index, see [llms.txt](https://openport.gitbook.io/homepage/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://openport.gitbook.io/homepage/welcome-to-the-port/janus-gate/consensus-of-pust.md).

# Consensus of PUST

## Price Stabilization Mechanism

PUST (Port USD Token) can always be minted with USD 1 equivalent assets in the Port ecosystem, or exchanged for 1 USD equivalent assets. Based on this, arbitrage participants in the community can adjust the supply and demand of PUST through the minting and redemption of PUST, and affect the price of PUST in the open market.

* When the market price of PUST is higher than 1 USD, arbitrage participants in the community can mint new PUST with a value of 1 USD in Janus Gate, and sell it in the open market for more than 1 USD to complete the arbitrage.
* When the market price of PUST is lower than 1 USD, arbitrage participants in the community can buy PUST at a price lower than 1 USD in the open market, and redeem assets equivalent to 1 USD in Janus Gate to complete the arbitrage.

Through mechanism design, PUST realizes that its value continues to fluctuate in the equivalent of 1 USD.

## The Principle of Stablecoin

At any time, the minting of a new PUST requires the mint to pledge an asset equivalent to 1 USD in Janus Gate as a guarantee.

In the initial state, minters need to provide 100% USDT collateral for PUST minting. At this time, PUST has a sufficient amount of USDT for value guarantee.

As the demand increases, the PUST price will continue to increase. At this time, the protocol will gradually reduce the proportion of collateral for minting new PUST, and the reduced collateral value will be provided by the protocol governance token PEACE. When the demand for PUST decreases, the protocol will gradually increase the proportion of collateral for minting new PUST, so that the proportion of USDT in the collateral will increase.

{% hint style="success" %}
For example: when the mortgage rate is 100%, the mint needs to provide 100% USDT as collateral to mint PUST. When the mortgage rate decreases, for example, to 98%, minters are required to provide 98% of USDT and 2% of the protocol's governance token PEACE to mint new PUST, and so on.
{% endhint %}

During the minting process, the PEACE as collateral will be burned and destroyed. When the redemption occurs, the PEACE will be newly minted to the redeemer. Because the greater the demand for PUST, the more PEACE will be burned and destroyed by the casting, and the higher the price of PEACE will be. Therefore, the value of PEACE is positively related to the demand of PUST, and the market value of PEACE is the sum of the market value of the non-guaranteed parts of PUST.

## Dynamic mortgage rate adjustment mechanism

The protocol will automatically adjust the mortgage rate every hour, each adjustment is ±0.25%, and the adjustment is based on the weighted average price of PUST in the previous hour.

* When the weighted price is lower than 0.995 USDT, the mortgage rate will increase by 0.25% per hour‌ 
* When the weighted price is higher than 1.005 USDT, the mortgage rate will decrease by 0.25% every hour

That is to say, when the demand for PUST is very strong for a long period of time, causing the weighted price of PUST to continue to be greater than 1.005 USDT, the mortgage rate of the protocol will continue to decrease until the minimum value of 50%. When the demand for PUST continues to be sluggish and the weighted price of PUST continues to be less than 0.995 USDT, the mortgage rate of the protocol will continue to increase until 100%.<br>


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