RAI is an ETH-backed stablecoin with a managed float regime, where the exchange rate is determined by supply and demand. The protocol tries to stabilize its price by constantly devaluing or revaluing it. There are two parties involved in the supply and demand mechanic: SAFE users who generate RAI and RAI holders who hold, speculate on, or use RAI. Compared to protocols with a fixed exchange rate between their native stable asset and fiat, RAI offers flexibility and discretion in its monetary policy. The protocol can change its target exchange rate for its own advantage and attract or repel capital as needed.
