Stablecoins are obviously leading the holding sector of the market as by now because of their doubtless stability and reliability. However, they still rely on purchasing power and with high inflation courses as the one happening right now even these can be affected.
A new alternative is being born right now and it’s called the CPI tokens - Consumer Price Index tokens to be exact. The name doesn’t actually speak for itself that much, but it means such tokens adjust to the current inflation and market value of the coins and stabilise the prices and supply according to these parameters. For these adjustments tokens use two protocols: Frax and Volt - we’ll talk about those later.
CPI is originally a statistic, regularly published by the US Department of Labour. It indicates an average in price, that consumer pay for some goods. The research is being done on all types of physical and non-physical products: starting from bacon and ending up with company stocks. Right now, multiple events that inflicted inflation (sounds gross, we know) have been going on simultaneously and you are absolutely wrong if you think gas prices won’t cause any interest loss to your stables. All the economics in the world are bounded with each other due to the already mentioned purchasing power.
The CPI tokens rely on monthly CPI index and are pegged to it, meaning the decrease or increase of CPI will influence the token directly. That makes CPI tokens the ultimate non-inflational storage with no need for often portfolio relocation as it is with stables.
And now to how is that all possible - Volt and Frax protocols
$VOLT is a token, that can be received in multiple ways:
- By swapping the token on a DEX (Curve, Uniswap etc.)
- By putting the token into project’s PSM (Price Stability Module)
The second option is much more interesting because of the way it uses deposited tokens. The protocol automatically places the deposited stablecoins into yield aggregators to allow for annual token price growth. The token will also have a buffer cap to cut off the buffer between the stablecoins already put in the strategies and also known as PCV (Protocol Controlled Value) and the upcoming supply. If the buffer is too big a supply of tokens is added to the already active strategies, otherwise the buffer is used to backup all the $VOLT.
Frax has two main components:
- the $FPI token (an analog of PCV), which is the CPI-pegged token, stored in stablecoins deposited itself.
- $FPIS governance token, which is the key to DAO, that chooses what yield-aggregator programmes will be used to remain the token pegged to CPI.
Even though CPI tokens are just a concept by now, they are already dragging attention to themselves and showing some pretty unique tech and solutions to achieve the goal - the flexible cap, we can see with $BOLT will allow the tokens beat inflation every time that’s needed and the overall conception might change the game upside-down. Obviously, there will be some troubles, but we are curiously waiting for the launch.