5.3. Regulation of Coin Economy
As it described above, LAW-coin regulation is based on two principles:
- Regulation of economy is carried out by means of coin issue (putting money in circulation);
- Determination of issuing volume is based on supply principles (goods/services).
To implement these principles, we establish two special-purpose funds. The first one is the Issuing fund. The matter is that because of technological feature of the currency, the money is
to be issued at once. And if all money is put in circulation, then it can lead to economic collapse of the system. For this reason, all issued money shall be transferred to the special account operated by the collective body of the Foundation. Then, by decision of this body, the currency will be offered for swapping (up to a certain threshold) and incremental sales.
Diagram: Fund Management
Notwithstanding that we offer the currency supported by services having the certain economic value, we believe that we need an additional tool to ensure currency security (some kind of gold and forex reserves). For this reason, we decided to establish the Reserve fund to support the currency and ensure its security. The size of reserves is to be defined by volume of issue – a part of funds raised due to sale (or swap) of coins will be transferred to this fund. At the initial stage, this indicator is defined by the Project Team, in future - the collective body of the
Foundation will be in charge of it. In addition, tokens of services operating on the platform and being important for platform development may be a part of this fund.