Elastic Supply

HONO utilizes an elastic supply mechanism to maintain price stability and maximize returns for its holders. Since HONO is paired with USDC on Uniswap, its price is adjusted daily based on fluctuations in ETH’s market value. The HONO protocol leverages the vault’s wstETH holdings to rebalance HONO's price in response to these changes, ensuring that its value remains aligned with the backing asset.

While the vault grows through every transaction on the HONO Protocol, an unchecked or infinite supply of HONO could limit the potential gains for holders. To prevent this, HONO employs a built-in mint/burn mechanism that controls its supply in a dynamic, responsive manner. This elastic supply approach helps optimize the value of HONO, ensuring it can scale effectively and sustainably.

For a deeper understanding of how HONO maintains price stability and generates revenue, we encourage you to learn more about CHAKRA, the core mechanism driving these processes.