Corrective coefficient

Last updated on
August 15, 2023

Q: What is a corrective coefficient in Cryptocurrency?

A: A corrective coefficient refers to a mechanism used to adjust or influence the exchange rate during payment transactions. It is a dynamic factor that can be applied to alter the value of a particular cryptocurrency at the time of a transaction.

Q: Why is a corrective coefficient necessary?

A: Introducing a corrective coefficient serves several purposes within the cryptocurrency ecosystem. It enables the management of potential fluctuations in the exchange rate of a given cryptocurrency, thereby ensuring fair and consistent pricing during transactions. By incorporating this coefficient, cryptocurrencies can be better aligned with real-world values, making them more practical for everyday use.

Q: How does the corrective coefficient work?

A: The corrective coefficient is typically implemented as part of a payment system or platform that facilitates cryptocurrency transactions. It functions by adjusting the exchange rate between a cryptocurrency and a fiat currency or another cryptocurrency at the time of the transaction. The coefficient can be influenced by various factors such as market conditions, liquidity, and demand, and is set by the merchant.

Q: Who determines the corrective coefficient?

A: The corrective coefficient is determined by merchant. The KUNA Pay platform allows the merchant to set parameters that influence the corrective coefficient within certain limits, providing a degree of control and customization.

Q: What are the benefits of using a corrective coefficient?

The implementation of a corrective coefficient in cryptocurrency transactions offers several advantages:

  1. Stability: By adjusting the exchange rate, the corrective coefficient helps stabilize the value of cryptocurrencies during payments, reducing the impact of sudden market volatility.
  2. Real-world alignment: The coefficient allows cryptocurrencies to be more closely aligned with real-world values, enabling easier comparison and understanding of their purchasing power.
  3. Fairness: The corrective coefficient ensures fairness in pricing by considering factors that affect the value of cryptocurrencies at the time of the transaction, preventing instances of overpayment or underpayment.
  4. Increased adoption: By mitigating the inherent volatility associated with cryptocurrencies, the coefficient encourages wider acceptance and adoption of digital currencies in day-to-day transactions.
Corrective coefficient