Initial Network State
The initial goal would not be to maintain a stable price. The main tradeoff is volatility and profitability versus stability and consistency. We like Babylonia of the past need growth (like our empire did) and the only way to achieve that is through volatility and profitability and that would be what the focus would be on.
With the ways passed down to us by god Enki and the policies at scale we've adopted, $BBY should be able to function as a stable asset. Pressures of pushing the market to either side (upwards or downwards) should be able to settle at a non-intrinsic value. The implementation of loose policy should allow Babylon to act as a wealth creation machine. The market premium of the token measures the positive sum of the game; all extrinsic value is new wealth created.

Alpha State

The initial network has a one-way treasury (allowing money to go in but not out), the bonding contract (through which supply increases and profits are produced), and the staking contract (where profits are distributed).
The following are the initial policy states:
  • BCV
    BCV varies based on bond types. It is tuned regularly by the Babylon team. For example, if the protocol wants to accumulate more liquidity into its treasury, it can lower the BCV for liquidity bonds to increase their bond capacity and if they want more liquidity they increase the BCV.
  • Bond vesting term
    Bonds are vested for ten béru (five days) for all bond types.
  • BBY distribution
    Every time someone purchases a bond, the proceed will go to the Babylon treasury. A corresponding amount of BBY will be minted and distributed to three parties:
    • Bonder
      The bond purchaser will receive the quoted amount of BBY linearly over the vesting term.
    • DAO
      The treasury receives the same amount of BBY as the Bonder, and this is used for the reasons specified earlier.
    • Stakers
      After accounting for the BBY distributed to the bonder and the DAO, the rest will be as sBBY and would go proportionally to all addresses holding staked Babylon.

For true Babylonians: