Monetary policy shaped by the market
FORGE takes one input: whether ETH is entering its market or leaving it. That single signed number sets how fast supply enters circulation, funds the reserve, and decides whether the protocol is buying its own token back. There is no target price, no fixed APY, no governance, and no oracle.
The pool is the instrument
A hook sits on the FORGE/ETH pool and watches the ETH leg of every swap, keeping one signed running total for the epoch in progress. ETH paid in is demand arriving. ETH taken out is capital leaving. Nobody writes that number by hand and no oracle reports it.
The engine has no view about what FORGE is worth, and cannot form one: its only input is a quantity of ETH.
Never reverts
A hook that throws is a pool nobody can trade. Every branch that cannot compute a charge returns zero and lets the swap through. A monetary reading is not worth bricking a market for.
The toll
1%
Charged on the unspecified side of the swap, which is the output on an exact-input trade. So the swap decides where it lands, not us.
- BUYpays in FORGE, which is burned
- SELLpays in ETH, which becomes reserve
Both are useful, and neither is aimed at a direction.
The engine settles, once every four hours
+15%
The release rate steps up by a fraction of itself, capped. Five unbroken epochs roughly double it.
-60%
The rate is cut in one move, floored, and part of the reserve buys FORGE off the market and destroys it.
Growth must be argued for repeatedly. Retreat is granted immediately.
The asymmetry is the design. Demand has to persist across epochs to earn a large rate, because each epoch grants only a step, while one epoch of capital leaving takes most of it away. A flat epoch counts as not-positive on purpose: an epoch that produced no demand has not earned a step.
4 hours
5.00K / epoch
400.00K / epoch
25% of reserve
Both bounds are compile-time constants, so the worst case in either direction is known before launch rather than discovered during one.
Capacity is bought with supply
Staking normally asks for nothing: deposit, earn, leave with everything you brought. Capacity asks for something. The only way to hold a larger share of what the engine releases is to destroy FORGE that exists today. Not locked. Gone.
That turns it into a decision. A participant chooses between liquid supply now and a claim on a stream whose size they do not control and cannot predict, because the market sets it.
Leaving costs too
10%
of the capacity that earned it, burned on every claim. A holder taking profit hands part of their future share to everyone who stayed.
Without it, the optimal play is to claim every epoch and carry no risk, which is the same as having no mechanism at all.
Resources, not a promise
The ETH side of the toll accumulates in the engine. In healthy conditions it simply builds. When flow turns negative it is spent, buying FORGE and burning it.
Reserves are not a redemption promise and not a price floor. They are resources the monetary system controls, deployed by rules fixed before launch. If the reserve is empty, a negative epoch cuts the rate and buys nothing, and the epoch still closes: a defence that cannot execute never freezes the clock.
Fixed at construction, and only ever smaller
Issuance normally means a live mint, and a live mint is the one thing every scanner flags and every holder has to trust somebody about. FORGE does not have one. The whole supply exists at construction and no function can make more. What the protocol calls issuance is release: tokens already minted, held by the engine, entering circulation at a rate the market sets.
1.00B FORGE
Fixed at construction
600.00M
Held by the engine, released over time
350.00M
Seeded into the FORGE/ETH pool
50.00M
The pot is finite. When it runs out the stream stops, and nothing mints more. That is the trade for having no mint function.
What can go wrong, stated plainly
The market is the input, so the market can be the attack
Flow is measured per epoch and expansion is capped per epoch, so buying pressure cannot become issuance faster than one step at a time. Sustained capital can still buy sustained expansion. That is the mechanism working, not failing.
A wash trade earns nothing
Buying and selling the same size nets to roughly zero flow, minus the pool fee and the toll. It pays to move the price against itself and buys no expansion.
The pot is finite
When the issuance pot runs out, the stream stops. There is no function that refills it.
Impermanent loss is real
For liquidity providers, as in any constant-product market. The pool being monetary infrastructure does not change that arithmetic.