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Float Protocol › The Basket

# The Basket FLOAT is different to other stablecoins in that one cannot exchange FLOAT for any underlying collateral held by the Protocol. We instead have a fund to aid the stabilisation of the FLOAT market price during periods of volatility. We refer to this fund as the *Basket* which will contain an approved set of cryptocurrencies. In version 1 of the Protocol the Basket will only contain ETH but in later versions, we plan to diversify the assets held within the Basket via governance vote. The initial value of ETH in the Basket is equal to the initial value of the total FLOAT minted at the initial minting ceremony of the Protocol, where participants can purchase FLOAT at an initial target price of 1.618 USD/FLOAT with ETH. Thus, the Protocol has an initial *Basket Factor*, ${tex`b`}, of 1 given by ${tex.block`b = \frac{b_\star^{ETH}}{\Sigma^{FLOAT} \times t_\star'} `} where ${tex`b_\star^{ETH}`} is the value of ETH stored in the Basket, ${tex`\Sigma^{FLOAT}`}, the number of FLOAT tokens in circulation and ${tex`t_\star'`} is the target price of FLOAT. As time evolves, the Basket Factor will change over time depending on the FLOAT market price and the ETH price. For example, if the market price of FLOAT is below the desired target price, the Protocol will purchase FLOAT off the market using ETH from the Basket. If the market price of FLOAT is above the target price, the Protocol will sell newly minted FLOAT for ETH which is deposited into the Basket. The Protocol aims to have a Basket Factor of 1 and will try to achieve this during stabilisation events of the FLOAT market price which rely on Dutch Auctions. As confidence grows in the Protocol, there may be an opportunity to remove the target value of ${tex`b = 1`} via a governance vote. `32:[] 2f:{"title":"The Basket / Float Protocol ","cells":[{"id":0,"value":"$31","pinned":false,"hidden":false,"mode":"ojs"},{"id":22,"value":"md`Next, we'll look at the tokens that make this system work.\n\nNext`","pinned":false,"hidden":false,"mode":"ojs"}],"files":"$W32","stdlib":"1","titling":"auto"}