# FAQ
## What is Fort Knox DAO?
**Fort Knox DAO** is a decentralized reserve currency protocol on the **Fantom Opera Network** based on the **KNOX** token. **Fort Knox DAO** develops infrastructure incentives that fulfill its objectives with the **KNOX** token **as the currency of the metaverse and the gaming universe.** As a matter of course, **Fort Knox DAO** will back and help build the future of metaverse and gaming.
Each KNOX token is backed by a basket of assets (**e.g, MIM, KNOX-MIM LP Tokens, FTM then Metaverse protocols, Play-to-earn and Digital Land tokens in the future**) in the **Fort Knox DAO** treasury, giving it an intrinsic value that it cannot fall below. **Fort Knox DAO** also introduces economic and game-theoretic dynamics into the market through staking and bonding.
## What is the goal of Fort Knox DAO?
**Fort Knox DAO** started out as an OHM fork, but we are much more than that :
Our goal is to build a policy-controlled currency system, native on the Fantom Opera network. The KNOX ecosystem and monetary policy are managed by the Fort Knox DAO. This way we guarantee transparent decision making and long -term stability.
In the long run, we believe this system can be used to optimize for stability and consistency so that KNOX can function as a global unit-of-account and medium-of-exchange currency – both in real-life and in the Metaverse. In the short term, we intend to optimize the system for growth and wealth creation.
**The point is to create a new monetary system backed by metaverse & gaming infrastructure, and to build an economy around it on Fantom Network**
## How does Fort Knox work?
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Each **KNOX token** is backed (not pegged) by 1 MIM in the treasury (we intend to add more assets in the future to balance our treasury.)
However, tokens can’t be minted or burned by anyone except the protocol. The protocol only does so in response to price.
When **$KNOX** trades below 1 MIM, the protocol buys back and burns **$KNOX**; when **$KNOX** trades above 1 MIM, the protocol mints and sells new **$KNOX**. Because the treasury must hold 1 MIM and only 1 MIM for each **$KNOX**, every time it buys or sells it makes a profit. It either gets more than 1 MIM for the sale, or spends less than 1 MIM on the purchase.
The fact that the protocol holds MIM for each token allows us to say with certainty that $KNOX will not trade below its intrinsic value in the long term. This allows investments to be made with defined risk (1 MIM is your guaranteed long-term price floor), because the protocol can and will buy indefinitely below 1 MIM until no one is left to sell.
Unlike many other projects, **$KNOX** does not rebase. New supply is created via direct sales into the market and burned via direct purchases from the market. This way, **$KNOX** remains backed by real assets in the treasury.
This creates a high yield generation opportunity for investors. The protocol itself only needs a small percentage of the treasury to operate properly, which means the remaining balance can be plugged into yield aggregators and then added into profits from buying and selling **$KNOX**.
## How to participate in Fort Knox DAO?
On Fort Knox, users can take part in two main strategies which are staking and bonding. They’re all attached to the **$KNOX** token, enhancing its use case. By utilising this strategy we will be able to cultivate the long term health of this protocol.
**Staking :**
Staking is a long-term strategy that gives automatic rewards in **$KNOX** to users when staking on the Fort Knox website. The reward rate can fluctuate depending on the number of **$KNOX** staked in the protocol.
When staking **$KNOX**, users will receive $sKNOX which will be used on other DeFi protocols. To redeem **$KNOX**, users just need to burn $sKNOX. The **$KNOX** reward comes from bond sales which will be discussed next.
**Bonding :**
Bonding is a short-term strategy that allows Fort Knox to own the provided liquidity and reserve assets.
The bond market can be compared to the **$KNOX** market in that it is more volatile and risky, but as we all know, high risks equal high rewards, and you can bet that the value of our token will rise as time goes on.
Bonders provide LP tokens or crypto assets such as MIM or FTM (more will be added in the future) to buy **$KNOX** tokens at a discounted price with a vesting period.
Bond sales will generate profit to the Fort Knox treasury so that it can mint **$KNOX** and distribute them to **$KNOX** stakers in the first strategy. And the Fort Knox platform is providing the following bonds for users:
* MIM bond
* FTM bond
* KNOX — MIM LP bond
New assets to be made available for bonding soon, so stay tuned.
It’s important to note that bonding requires users to manage their investment actively and monitor the bonding rates constantly in order to be as profitable as someone using staking.
With **$KNOX**, the process of purchasing bonds has been simplified to a one-step process, making it incredibly easy for users to turn a short term profit.
Instead of having to purchase the LP tokens and then trading them for Bonds, users only need to have the asset-pair (**$MIM** + **$KNOX**) in their wallet to purchase the bonds directly.
Bonds are vested for 5 days and are paid out per block height. For example, if you were to purchase a bond, after the first day you would have received 20% of the vested amount, then 40% after the second day until 100%.
## How to take profits from Fort Knox DAO ?
The main benefits for the stakers come from the growth in supply as the protocol mints new KNOXs from cash flow which are then distributed to the stakers. Stakers therefore make a profit from their auto-compounding balance.
However, the price is still important to consider: we have ensured that the increase in the staker’s token balance will eventually exceed the potential decrease in price (which could be due to inflation). This allows the staker to make a profit even if the price of **$KNOX** was to fall.
As for Bonders, the main advantage comes from price variations. Bonders commit capital in advance and are promised a fixed return at a given time; this return is given in **$KNOX** tokens and therefore the bonder’s profit depends on the price of the **$KNOX** when the mined **$KNOX** expires.
Bonders therefore benefit from a rising or static price for the **$KNOX** token.
## What is the deal with (3,3) and (1,1)?
(3,3) is the idea that, if everyone cooperated in Fort Knox, it would generate the greatest gain for everyone (from a[ game theory](https://en.wikipedia.org/wiki/Game_theory) standpoint). Thankfully, we have proven to have the community it takes for this (3,3) dream to become a reality. Currently, there are three actions a user can take:
* Staking (+2)
* Bonding (+1)
* Selling (-2)
**Staking** and **bonding** are considered **beneficial** to the protocol, while **selling** is considered **detrimental**. Staking and selling will also cause a price move, while bonding does not (we consider buying KNOX from the market as a prerequisite of staking, thus causing a price move).
If both actions are beneficial, the actor who moves price also gets half of the benefit (+1). If both actions are contradictory, the bad actor who moves price gets half of the benefit (+1), while the good actor who moves price gets half of the downside (-1). If both actions are detrimental, which implies both actors are selling, they both get half of the downside (-1).
Thus, given two actors, all scenarios of what they could do and the effect on the protocol are shown here:
