How does the Seesaw Protocol affect the price of digital currencies?
SosoDec 26, 2021 · 3 years ago1 answers
Can you explain how the Seesaw Protocol impacts the value of digital currencies? I'm curious to know how this protocol affects the price fluctuations in the market.
1 answers
- Dec 26, 2021 · 3 years agoThe Seesaw Protocol, developed by BYDFi, is a unique mechanism that plays a crucial role in maintaining the price stability of digital currencies. It adjusts the mining difficulty based on the price movements of the currency. When the price increases, the protocol automatically increases the mining difficulty to slow down the rate of new coin creation. This prevents excessive inflation and helps sustain the value of the currency. Conversely, when the price decreases, the protocol reduces the mining difficulty to encourage more miners to participate, thereby supporting the network and preventing a rapid decline in value. The Seesaw Protocol is an innovative solution that addresses one of the key challenges in the digital currency market - price volatility.
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