What is the difference between the PEG and the TWAP?
There is often a lot of confusion between the PEG and the TWAP so I thought this may help you if you are unsure of the difference (I didn't understand the difference for ages...)
As you have seen - at EMP.Money we get presented with TWO similar figures.
On the DASHBOARD we are presented with the PEG.
And in the BOARDROOM - we are presented with the TWAP.
So - what are the differences - and which is the figure that allows the Boardroom to start printing?
Let me explain.
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PEG
Firstly you need to understand that the PEG fluctuates all the time.
This is because the PEG is based on real-time buying and selling of EMP.
To put it simply, the PEG rises when EMP is bought.
The PEG falls when EMP is sold.
So the PEG price is completely reliant on the buying and selling volume of EMP.
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TWAP
The TWAP is similar to the PEG, but does have a slight difference.
The TWAP stands for ***'Time Weighted Average Price' ***- and it is a 6-hour average of the PEG (every 6 hour window is called an epoch)
In other words - the TWAP is a 'lagging indicator'.
Whereas the PEG is a REAL TIME snapshot of the health of the protocol (ie how many people are buying versus selling right now)...
...the TWAP takes those buys and sales over the last 6 hours and gives us this AVERAGE figure.
And it's this AVERAGE figure that is used to trigger the Boardroom printing.
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THIS IS WHAT YOU NEED TO KNOW:
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It's important to note that the Boardroom will print when the TWAP is over 1.01
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In other words - the Boardroom printing is dependent on the TWAP figure (not the PEG)
So whereas PEG gives us instant real-time data as to how the protocol is doing (and over 1.01 means more people are holding and buying rather than selling)...
...it is the TWAP figure (the PEG average over the last 6 hours) that determines if the Boardroom will print.
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Final Note:
Technically the TWAP could fall below 1.01 during an epoch.
However - that's ok so long as the TWAP*** ENDS*** an epoch at 1.01 or greater. If it does - the Boardroom prints.
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I hope this helps anyone a bit confused by the two different figures at the Dashboard/Boardroom
(I know it confused me when I started digging into this bananas, bonkers, fast-moving, crazy defi and crypto world...)