Understanding $PEAK as an algo-peg token.

$PEAK is a token algorithmically pegged to the price of $METIS.

The algo-peg is maintained by the number of $PEAK tokens to $METIS in the liquidity pool.

When users purchase $PEAK, they take $PEAK out of the liquidity pool and add $METIS.

Conversely, when $PEAK is sold, users are removing $METIS.

When there are too few $PEAK tokens in the liquidity pool to available $METIS, the $PEAK token is above the peg.

To maintain a 1:1 parity, The Summit will enter an inflationary epoch when there are more than 1.05 $METIS tokens for every 1 $PEAK token in the liquidity pool. The Summit will print more $PEAK tokens into circulation to encourage the peg to restore parity.

When there are not enough $PEAK tokens in the liquidity pool to available $METIS, the $PEAK token is below the peg. To correct this, The Pond becomes available to incentivize users to burn excess $PEAK tokens to receive $POND that can be later redeemed at a premium when the peg is greater than 1.1 (more information at The Pond).

Further, when the protocol is below the peg, users obtain a derivative asset of $METIS at a discount to the current market value in dollar terms. To protect the stability of the peg during deflationary epochs, a taxation schedule is applied and can be seen below.

The $PEAK taxation follows the default mechanics of the $TOMB token from which it was forked. At the protocol’s discretion the $PEAK tax can be disabled and enabled in a manner that ensures the longevity of the protocol. As the peg increases in tiers, the taxation rate is reduced.

As indicated on the chart, the peg only needs to increase by a maximum of 0.2+ for $PEAK holders to realize a profit in pro-rata $METIS compared to entry. As the peg continues upward, the ROI potential increases respectively with the decrease in tax fees. On a dollar-cost basis, the lower the peg, the greater the arbitrage opportunity in future.

We recognize that market conditions will make it difficult at times for the peg to maintain parity, for this reason the $PEAK token has several use cases that will be explored in later sections.