🛒 Buybacks

If the FRENS token market capitalization falls substantially below the treasury fund value, this indicates panic selling has crashed the token price.

To restore the soft peg between the market cap and treasury holdings, FRENS buybacks can be executed using treasury assets.

Buybacks involve using treasury funds to purchase FRENS tokens on the open market. This applies upward pressure on the FRENS price to return it closer to the peg ratio.

Specifically, here is how treasury buybacks work:

1. The community treasury holds stable assets like USDC in addition to other portfolio investments.

2. When panic crashes the FRENS market cap, treasury assets are used to buy back FRENS at the depressed prices.

3. These purchased tokens are then distributed to the treasury.

4. With fewer FRENS available to purchase, buy demand applies upward price pressure which helps restore the soft peg between market cap and treasury value.

5. Token holders benefit from the stabilized price and can even gain bonus FRENS if bought back tokens are redistributed to holders.

FRENS buybacks are an important mechanism to maintain the health of the soft peg system. They prevent panic from substantially decoupling the token value from the assets backing it in the treasury. Buybacks turn market overreactions into opportunities to reinforce Soft Peg stability.