In general, seignorage works as follows by following a rules based system. In the case that the price trades above $1 per unit, the smart contract central bank will issue additional units to increase supply until the price reaches $1, collecting profits (known as seignorage) in the process. If the price drops below $1, the central bank will use seignorage profits to buy up units, thereby decreasing supply and increasing price. If the price is still below $1/unit after the central bank has spent all of its seignorage, the central bank will issue “seignorage shares” that promise future seignorage to buyers to raise funds. This system is predicated on the future growth of demand for the stablecoin. If the central bank reaches a point where the currency is below $1/unit, it is out of seignorage, and unable to sell seignorage shares to raise funds, then traders will further lose faith in the future prospects of the stablecoin pushing its price down into a death spiral. Seignorage shares based stablecoins can sustain some downward pressure, but it is difficult evaluate just how much pressure they can sustain because resiliency is tied to the expectations of seignorage share buyers.