Stable Credit Lifecycle

Stable Credits are created when a network member utilizes their Credit Line to overdraft their network account in order to transfer credits to other network members. While the recipient of the transfer receives newly minted credits, the sender’s network account records the newly created debt as a negative balance.

Likewise, Stable Credits sent to indebted accounts are burned on arrival, while the recipient’s negative balance contracts accordingly.

Since Stable Credits are created when credit is extended, and destroyed when debts are repaid, the Stable Credit supply is always equal to the demand exercised on it by outstanding debt. This creates a supply/demand equilibrium which maintains price stability within the network, and hence contributes to the Stable Credit's soft peg to its Reference Currency. Learn more under Soft Peg.