# ICHI Q&A - Protocol & oneTokens (e.g. oneETH)

### Notice:
This Q&A serves as an informal recording of script from ICHI's TG: https://t.me/ichifarm

Follow this dialogue to better understand ICHI's protocol and oneToken technology.

**Q's** are directly from a community member and answers from ICHI core team.

### What is the Point of ICHI Protocol? How is it different from just selling a proportion of your token?
### For example: the minting ratio for oneEth is 0.85, how is that different from me just selling 15% of my eth?
### If there is no way to exchange oneEth back to Eth, isn't that just selling?

Daniel,
Great questions - First, you are not selling ETH in the open market (causing supply of the token to go up), instead, when minting oneETH you are putting that ETH into the community treasury

thus locking the ETH and decreasing the actual supply of it in the open market

### What is the point of growing a treasury that I cannot directly withdraw from? For a token like eth, the impact of me selling would be negligible

### The treasury would grow in time from the price appreciation of eth, how does that benefit oneETH holders?

Daniel,
In addition - your 1 oneETH doesn't just give you a stablecoin that is worth 1 USD, it also gives you one vote in how to govern the Treasury of ETH...There are many things the ETH community can do with the treasury based on community votes. Pay out dividends, grow the collateral, and down the line implement interesting investment/farming strategies that will allow that treasury to grow.

It can thus become a source of added yield for the oneETH holders.

### But who implements that functionality?

### And what prevents the token holders of some small cap coin from directly building something similar in their protocol? Why would the use the one system

### Why would they use the ichi?

Daniel,
In the future strategies will be able to be proposed to the oneToken community and through a vote could be automatically implemented by the oneToken governance contract.

Masanobu Fukuoka,
Nothing is stopping them. But they wouldn’t benefit from ichi services and rewards :)

### I thought the oneToken was supposed to be the governance token of the treasury? what does ichi do?

Masanobu Fukuoka,
ICHI governs whitelisted oracles, minters, services, ICHI rewards, admitted collateral, and investment strategies — oneToken governs which it decides to use.

Daniel,
ICHI can be thought of as the "global" governance, while oneTokens are "local" governance.

### So the oneToken holders chose from a list of functionalities that are implemented by the ichi devs?

Masanobu Fukuoka,
Correct - kind of like someone using AWS - AWS governs the services, you govern your account.

### What are the current functionalities that would benefit the oneToken holders? Do you have an example? Or a roadmap?

Masanobu Fukuoka,
Too easy today ... 98%+ oneTokens in circulation were minted to capture ichi rewards - and the project gets the treasury at no cost.

More interesting Q at scale.

### One of the tokens that you whitelisted, the vBTC clearly has failed to maintain the peg to BTC. Isn't that project just draining the ichi rewards at this point?

Masanobu Fukuoka,
That is a vBTC problem - ichi is proving that the stablecoin stays at $1 even if the project has problems

No because ichi rewards are distributed based on proportional oneTokens - this project minted oneTokens. Those oneTokens have a treasury. That treasury will pay value to xICHI.

+ they paid ICHI ~$40k grant for oneToken

### If the price of a oneToken drifts away from 1 USD what mechanisms are there to return it to the peg?

Masanobu Fukuoka,
It doesn’t work like that - you can turn it in for $1 at any point. It has a hard peg like USDC/USDT. Not a soft peg like so many.

I can explain how usdc, usdt, and oneTokens maintain peg if you'd like.

### For example, lets say the price of oneETH has become 1.05 USD due to market forces after I mint it

Masanobu Fukuoka,
Someone would mint more for $1 each and sell them for $1.05.

The selling pressure would return it to $1.

### What oracle ichi use to get the price of eth?

Masanobu Fukuoka,
Chainlink.

### For example, lets say the price of oneETH has become 0.95 USD, what happens?

Masanobu Fukuoka,
Someone buys it for $0.95 and turns it in for $1 ... the buying pressure returns it to $1.

### By turning it in, you mean burning it for usdc?

Masanobu Fukuoka,
Correct.

### So 1 oneToken always equals 1 usdc? I mean when you burn it.

Masanobu Fukuoka,
1 oneToken always equals a receipt/claim for 1 USDC ... I say it like that.

### What if the price of usdc drifts away from 1 dollar? It fluctuates by 0.5% daily

Masanobu Fukuoka,
Someone would mint/redeem and return it to $1.

Compound assumes it is $1 ... so do we - initially we didn’t ... and that caused more problems than it fixed.

We can accept multiple collateral as well (TUSD, BUSD, HUSD, etc) ... but additional complexity isn’t worth it at this scale

### Ok, thanks I believe that peg is very solid.

### Are there future plans to implement ways to benefit early oneToken holders? For example selling 0.15 worth of WBTC when it is worth 100 dollars, vs I selling 0.15 worth of WBTC when it is worth 10000 dollar means very different things

Masanobu Fukuoka,
oneToken holders control the oneToken treasuries ... the theory is that governance potential + increasing value will lead to more formalized governance, programs, grants, etc ... IMO, it will take the form of additional benefits to the voters (oneToken holders) ... but we will see!

You have really good Qs - PM me if you would like to have a convo one day.

### Does that mean people who join later will have more voting power?

Masanobu Fukuoka,
No - I just mean as treasuries get bigger, they will pay for more things ... which things are controlled by oneToken voting where every oneToken is a vote

### Let me rephrase, people who chose to collateralize the token at a higher price will have more power?

Masanobu Fukuoka,
I don’t understand this as oneTokens are always worth $1.

### Because they are effectively selling a smaller amount for the same oneToken?
Masanobu Fukuoka,
Each oneToken costs $1.

### oneETH = 0.85USDC + 0.15/100 when eth=100USD vs oneETH = 0.85USDC + 0.15/1000 when eth=1000USD

Masanobu Fukuoka,
Nope - a oneETH is worth $1.

### The latter gets to keep more eth?

Masanobu Fukuoka,
I see - you think the person has a claim on ETH when the hold a oneETH. They don’t. Instead, they have 1 vote + $1

### The former spent keeps 0.99 eth after the minting, the latter keeps 0.999 eth after the minting (something like that). They both have 1 oneETH

Masanobu Fukuoka,
They both spent $1 at the time of minting.

This is (economically) the same as swapping crypto for USDC

Just with USDC, you don’t get the vote on what to do with the treasury :). Centre decides that.

### If they both start with 1 ETH and sell some for USDC to mint oneETH, the former gets to mint 100 oneETH, the later gets to mint 1000 oneETH

Masanobu Fukuoka,
One of them stayed long on ETH (taking on more risk in USD terms) and bought stablecoins later - fine.

They both paid $1 per stablecoin.

### Since the price of ETH will likely increase in the future by a great amount, the one who join later will likely have 10~100 times the voting power? This is a big problem if the oneETH holders don't somehow benefit from minting early

Masanobu Fukuoka,
I see - interesting thought. The early oneToken voters (of any oneToken) could decide to change the way they count votes. And pass any other governance rules. This has probably got a bit too nuanced for the broad audience. Happy to discuss any potential proposals. PM me if you would like my input.

### The only benefit I can think of from minting early is getting the liquidity mining rewards

Masanobu Fukuoka,
That is a great reason.

### I think I am convinced. Great timing for the launch of the project 2020-11-11, all ones. Also right before the bullrun

Masanobu Fukuoka,
:) we love our 1s and put this thing together in 1.5 months to avoid missing bull run :)

c ct,
thanks for the detailed explanation

Masanobu Fukuoka,
Yessir - fun Qs - I can tell you have been in the space a while

**3-26-21 Informal Q&A Concluded**

↓ **Continued Topic: USDC & Treasury 3-27-21** ↓

### What if the price of usdc drifts away from 1 dollar?

Masanobu Fukuoka,
Someone would mint/redeem and return it to $1.

### Eventually though it wouldn't be worth a dollar anymore though right? If the token it's based on dropped significantly in price. It's redeemable for a dollar as long as their is usdc in that coins treasury, which is around 97% of the collateral + funds controlled by each coin currently. But if there is now for example 98c in collateral/funds controlled per coin (96c in usdc and 2c of underlying asset, assuming the asset halved and it started at a 96-4 split) then the rational thing to do would be redeem your coin for 1$ asap, and then when there is no usdc left your coin is worth its share of the treasury, which would be 50c each in this example.

Masanobu Fukuoka,
When treasury reserve ratio drops beneath 150%, the treasury will take action to bring it back to 200%. This is missing in your analysis. Imagine two hypothetical situations for oneBTC:
1. 50% of oneBTC is redeemed for USDC. What happens? Nothing. Treasury reserve ratio stays exactly the same. There is no negative feedback loop like with algos or fractional stables. (Optionally) Treasury could buy some more USDC but it isn’t because risk is higher.
2. Bitcoin drops 50% two consecutive days, taking price beneath $15k. What happens? Treasury sells Bitcoin for USDC. oneBTC becomes 99+% backed by USDC. Treasury is under $10k.

In both cases, oneBTC remains worth $1.

**Concluded.**