Xdef is a synthetic asset that functions to reflect the “price” of all Defi Total Value Locked. Xdef derives its target price (tp) directly from the total Value Locked (TVL) at a rate of of Defi TVL x 0.1^11 :
tp = TVL x 0.1^11
For example, assume TVL = $14,500,000,000 tp = ( 14,500,000,000x 0.1^11) Target price is $0.145.
When current market price (cmp) = target price (tp) Xdef is in a state of equilibrium. Its price perfectly reflects TVL.
When will elasticity kicks in.
When current market price (cmp) ≠ target price (tp) Xdef is in a state of imbalance. Its price does not perfectly reflects TVL. (Contraction/Expansion)
The Protocol will try to bring CMP back to the state of equilibrium by contracting if there's negative rebase or expanding if there's positive rebase.