# Stability system

Stability system is the main defense line of ***PolyDogeDAO*** to prevent any destructive resistance. The point is to reward **PDD** buyers for helping the protocol to stabilize the price of **PDD** to it's peg to 1 WMATIC. 

* **1 PDD > 1.01 WMAIC** (expansion) \
  When **PDD** price is above the 1 WMATIC peg, the token supply will have to expand to push it back down to 1 WMATIC. The expand will be distributed to the Boardroom Stakers.
* **1 PDD < 1.01 WMATIC** (contraction)\
  When TWAP **PDD** price is below the target price of 1 WMATIC, **PDD** token will be issued but emmision will drop with one tenth of current expansion rate during expansion. The expand will be distributed to the Boardroom Stakers.

{% hint style="danger" %}
***DAO Fund will delete 3% of its PDD*****&#x20;reserves** ***each full epoch below peg***
{% endhint %}

For further economics see Boardroom section.

This two token system creates incentives through seigniorage, always pushing **PDD** towards its peg. **PDS** is used to redistribute the seigniorage from inflating the asset, while peg is used to establish a price floor while **PDD** is in its deflationary state.