How Stable Balance Works 

Fedi’s Stable Balance feature enables users to maintain a certain amount of bitcoin value in a fiat denomination in their Fedi wallet.

Fedi has made it easy to move value in and out of its Stable Balance feature as well as to make Stable Balance transfers to other Fedi users, which is what most everyday Fedi users might want to know about the feature.

This article is for those who want to know how Stable Balance works on the backend. And, to do so, it’s essential to understand what Stability Pools are.

What Are Stability Pools?

Stability Pools back the Stable Balance feature.

Stable Balance pairs two types of users: 

• those who want to lock in the fiat value of their bitcoin in the short term (Seekers), and

• those willing to ride out price swings for potential long-term gains (Providers). 

Seekers get predictability against fiat moves. Providers absorb the volatility and get amplified exposure to bitcoin's growth.

Becoming a Provider currently requires technical setup outside the Fedi app and carries real financial risk. Therefore, only highly experienced entities play this role.

The Stability Pool lets you choose your experience:

Option 1 - The Seeker: "I need my purchasing power in fiat to stay exactly the same for the next 30 days. I have fiat-denominated bills to pay this coming month and I want to manage my budget more easily."

Option 2 - The Provider: "I believe bitcoin's fiat value is going up over the long term. I'm willing to ride out the short-term price moves and I'll absorb the fluctuations for people who need stability right now."

The stability that Seekers get comes directly from Providers agreeing to experience amplified volatility on their behalf. If bitcoin's fiat value goes up during the period, Providers benefit. If it drops, they absorb the loss to keep the Seekers stable.

When the time period ends, both sides can either collect what they have or renew for another round. It's automatic, transparent, and simple.