IRMA redefines what stability means in the digital age. Here’s a quick guide to how it works, why it’s different, and how you can be part of it.
What does IRMA stand for?
IRMA stands for Inflation Resistant Medium of Account. It is a new type of stablecoin designed to resist inflation. Unlike other USD-backed stablecoins that inflate with USD, IRMA does not inflate with USD.
How does IRMA protect against inflation?
IRMA protects against inflation by having a mint price that adjusts with inflation, while the redemption price remains independent. When inflation rises, the mint price increases proportionally, allowing IRMA's exchange rate with USD to rise. The redemption price is determined by the total reserve backing and the total IRMA in circulation, separate from the mint price. This mechanism ensures that IRMA can protect your savings from inflation.
How can I mint IRMA?
We will be doing an alpha release soon! Keep track of our progress by visiting this site often, or joining our email list.
What defines a stablecoin?
A stablecoin is a cryptocurrency that maintains a stable price relative to USD. Issuers aim to keep it on par with USD (1 stablecoin = 1 USD). IRMA functions like other USD stablecoins when inflation is below 2%, but its mint price increases with inflation above 2%.
What does reserve backing mean?
Reserve backing means that when you mint IRMA, the stablecoin you use is stored in a vault and becomes part of IRMA's reserve. For example, if you mint 1,000 IRMAs at 1.0 USDC, you deposit 1,000 USDC with us. This 1,000 USDC is redeemable anytime in exchange for the 1,000 IRMAs. Until you redeem, the 1,000 USDC remains as reserve backing. If USD inflates, the value of your IRMA rises with respect to the USDC you deposited.
What are the risks?
The risks are about the same as the weakest stablecoin reserve backing. In other words, if one of the reserve backing stablecoins lose value, the maximum exposure is limited to the total amount of reserves for that particular backing. Which means that if the stablecoin that crashed in value constitute 10% of the total reserves, then the value of IRMA can drop by at most 10%. This risk is mitigated by choosing the top six stablecoins for backing, to start with. Along the way, if another stablecoin not in the list catches up and gets better than any of the six, the worst of the six will be replaced by this new and better stablecoin. There will be constan pruning of the six reserve stablecoins in terms of market cap and number of users.