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The Future Peg Protocol™

The Future Peg Protocol™ developed by ShariaCoin™ also known the Sharia Peg Protocol (SPP) is an algorithmic method that locks or pegs the value of a cryptocurrency token to the worth of a physical commodity in the future. This locking mechanism occurs after the cryptocurrency token has gained value through organic growth and general trading over an unspecified period. The value of the token is determined solely by market factors, including circulation supply and demand for the specific Sharia Pegged Cryptocurrency.
The SPP Collection, comprising cryptocurrencies, digital coins, and tokens of value, operates according to the Future Peg Protocol™. Similar to other cryptocurrencies, each coin or token starts as a generic unit with a nominal value. As trading activities and demand increase, the price of the coins naturally fluctuates based on market conditions. However, ShariaCoin™ SPP Tokens differs from traditional cryptocurrencies as it must accumulate its value over time to reach the peg value of one gold coin, which is equivalent to 4.25 grams of pure gold, also known as the “Sharia Gold Coin” (SGC) or “Digital Dinar”. Likewise, the future peg value of one “Sharia Silver Coin” (SSC) or “Digital Dirham” operates the same.
The Future Peg Value of each coin is defined by the value of the real-world physical commodity it aims to achieve in the future, particularly gold and silver by Sharia specified weight times the current market value.
To attain the Future Peg Value of 4.25 grams of gold per coin, which represents the standard for SGC, SPP tokens initiate at a value of $1.50, as an example. Through sales and trading, its value gradually appreciates until it reaches the Future Peg Value of 4.25 grams of gold per coin, based on the precise market value of gold when the peg value is achieved. At this stage, the value of ShariaCoin™ SPP Tokens becomes linked or locks to the chosen peg-to commodity, namely gold, and fluctuates in tandem with the global gold price relative to other major commodities and fiat currencies in to the future.
The Future Peg Protocol™ (FPP 1.0) offers a key advantage by stabilizing the coin at the peg value, effectively mitigating the significant volatility experienced with other cryptocurrencies like Bitcoin and Ethereum. This stabilization protects the value of the coin and the investments made by its holders. During the accrual phase, when each token strives to reach its peg value, investors and traders have an opportunity to generate wealth and profits by acquiring SPP tokens while they are still in the accumulation and accrual stage. Investments remain locked until the SPP cryptocurrency achieves its peg value, instilling confidence in the coin’s stability and long-term potential.
The gradual progression towards the peg value allows for the establishment of liquidity and the accumulation of gold reserves. This process eventually enables the redemption of coins by holders once they reach the peg value. At this point, each coin can be redeemed for a real gold or silver ShariaCoin™. Each digital currency precisely represents its weight in gold and silver at this redemption stage.
The Future Peg Protocol™ (SPP 1.0) is designed to offer a stable and secure method for cryptocurrencies to maintain their value. Here’s a breakdown of the key points for clarity:
- Peg Consensus: This is an agreement among coin holders that when the cryptocurrency reaches a predetermined value (peg value), it will lock in relation to the global spot price of the underlying commodity, which is gold in this case.
- Stability: By locking the cryptocurrency’s value to the spot price of gold, the protocol aims to reduce volatility and protect the investment from the kind of rapid value changes seen in other cryptocurrencies.
- Redemption of Coins: The protocol allows for the coins to be redeemed once they reach the pegg value. This means that the digital currency can be exchanged for physical gold or other forms of assets, ensuring that the coin’s value is tangible and real.
- Value Preservation: By backing the cryptocurrency with a physical commodity, the protocol seeks to preserve the value of the investment over time, unlike other digital currencies that may not have intrinsic value.
- Innovation: The Future Peg Protocol™ introduces a new approach to cryptocurrency valuation, setting it apart from traditional methods and potentially offering a more reliable form of digital currency.
The Future Peg Protocol™ aims to create a cryptocurrency that combines the innovative aspects of digital currencies with the stability and value preservation of traditional commodities like gold and silver.
Algorithm for the Future Peg Protocol (Conceptual):
Step 1: Initialization
Determine the target pegged value for the SPP token, which is linked to a specific physical
commodity.
Set the initial value of the SPP token to a value lower than the pegged value.
Step 2: Price Adjustment
Monitor the market price of the chosen physical commodity and track changes over time.
Calculate the difference between the current market price and the target pegged value.
Step 3: Gradual Value Adjustment
Based on the price difference calculated in Step 2, adjust the value of the SPP token incrementally based on volume and last spot price paid.
Increase or decrease the value of the SPP token proportionally to the price difference to gradually approach the target pegged value.
Step 4: Value Lock
Once the value of the SPP token reaches the target pegged value, lock the token’s value to the price of the underlying physical commodity.
From this point forward, the value of the SPP token will float with the price of the chosen
commodity, ensuring a direct correlation between the token’s value and the commodity’s price.
Mathematical Equation for Future Peg Protocol (Conceptual):
Let:
PV = Pegged value of the SPP token (linked to the physical commodity)
Vt = Current value of the SPP token
MP = Current market price of the chosen physical commodity
Step 2: Price Adjustment
Price Difference (PD) = PV – MP
Step 3: Gradual Value Adjustment
Vt+1 = Vt + k * PD
Vt+1 = New value of the SPP token
k = Adjustment factor (determines the speed of convergence to the pegged value)
Step 4: Value Lock
Once Vt+1 reaches PV, the value of the SPP token remains fixed at PV.