> For the complete documentation index, see [llms.txt](https://cron-finance.gitbook.io/twamm/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://cron-finance.gitbook.io/twamm/use-cases/token-monetary-policy.md). # Token Monetary Policy TWAMM enables DAOs to execute large sustained market orders on-chain to stabilize the price of one asset by acquiring or selling specific collateral over a prolonged period. The biggest protocols in DeFi have built complex mechanisms with this exact feature: * MakerDAO - Protocol Stability Module (PSM) * Fei Protocol - Protocol Controlled Value (PCV) * Frax Stablecoin - Algorithmic Market Operations (AMO) * OlympusDAO - Range Bound Stability (RBS) Stablecoins are one of the true early product-market-fit stories of DeFi. Truly DeFi native stablecoins leverage user collateral ### How can TWAMMs help? DeFi protocols need to innovate and iterate fast. A big hindrance to that goal is developing supporting non-core competence infrastructures to achieve a bigger goal. The next generation of algorithmic stablecoin and lending projects will leverage TWAMMs instead of trying to substitute inefficient systems. {% embed url="" %} Olympus DAO's next generation `Range Bound Stability` the system leverages TWAMMs to constrain the price of OHM tokens within the desired bounds. Today, they have to use inefficient (gas, monetary) and MEV-handicapped infrastructure to achieve the same goal.

Source: OlympusDAO

A big advantage of TWAMMs is the programmability and flexibility of long-term orders in addition to gas efficiencies. This allows the OHM team to issue and cancel long-term orders as needed and based on off-chain simulations. ```html EXAMPLE RBS TWAMM OPERATIONS If the price of the token increases beyond the range: - Create large TWAMM sell orders for tokens -> stables - Buy pressure increases the price of assets on local AMM - Arbs will source liquidity from other venues - Treasury order sizes far exceed market participants - External AMM prices reflect the desired price due to arbs - TWAMM increases sell pressure to push the token price down If the price of the token decreases beyond the range: - Create large buy orders for stables -> tokens - Buy pressure increases the price of assets on local AMM - Arbs will source liquidity from other venues - Treasury order sizes far exceed market participants - External AMM prices reflect the desired price due to arbs - TWAMM increases buy pressure to pull the token price up ``` OHM DAO is the first customer pioneering TWAMMs for monetary policy. The questions that are yet to be answered: > Are layered TWAMM orders more cost-effective and efficient than walls and cushions? > > How can the protocol leverage Maximum Extractable Value (MEV) to conduct Treasury operations more efficiently? {% embed url="" %} A dashboard of RBS operations pre-TWAMM {% endembed %} ### Next Generation Stablecoin Curve released its stablecoin and the underpinning infrastructure is a `continuous liquidation or deliquidation AMM`. Curve is a well-established protocol that can invest time and resources into developing a specialized TWAMM. {% embed url="" %} {% embed url="" %} ### The future is on-chain FX {% embed url="" %} {% embed url="" %} {% embed url="" %} --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://cron-finance.gitbook.io/twamm/use-cases/token-monetary-policy.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.