> For the complete documentation index, see [llms.txt](https://the-heist-1.gitbook.io/the-heist-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://the-heist-1.gitbook.io/the-heist-docs/how-it-works/the-peg-and-the-printer.md).

# Phase 2 — The Peg & The Printer

LOOT has a target price: **1 LOOT = 0.001 WETH**. The Printer is the part of the protocol that keeps supply honest against that target — creating more LOOT when the market says it's worth more than target, and doing nothing at all when it isn't.

## How a check works

The Printer runs on a fixed clock: every **6 hours**, anyone can trigger a check.

```mermaid
flowchart TD
    A[Every 6 hours] --> B{Is the price\nmore than 2% above target?}
    B -->|No| C[Nothing happens.\nNo printing, no debt, no IOUs.]
    B -->|Yes| D[How big a premium?\ncapped at 3% of all LOOT]
    D --> D2[Also capped at 10%\nof the pool's own reserves]
    D2 --> D3[Whichever cap is\nsmaller wins]
    D3 --> E[New LOOT gets created]
    E --> F[Half goes to\nHideout stakers]
    E --> G[Half gets sold\ninto the pool for WETH]
    G --> G2{Did the sale get at least\n95% of fair value?}
    G2 -->|No| G3[The whole check cancels.\nNothing minted, nothing sold.]
    G2 -->|Yes| H{Is the protocol's own\nliquidity below target yet?}
    H -->|Yes| I[80% of proceeds -> Floor\n20% -> growing the protocol's liquidity]
    H -->|No, already there| J[100% of proceeds -> Floor]
```

## The rules, plainly

* **What triggers it:** the average price over a recent window (never a single trade, never an outside source) has to sit above **2% over target**.
* **How much gets created:** the smallest of three separate limits — how big the premium actually is, **3% of all existing LOOT**, and **10% of what's sitting in the pool right now**. A small premium creates a small amount; a huge premium is still capped so nothing floods the market in one shot; and no matter how big the premium looks, the system will never create more than the pool can safely handle. See [why the pool-size limit exists](#why-a-second-limit-based-on-pool-size) below.
* **The split is always 50/50:**
  * **Half** goes straight to people staking MERRY in the Hideout (see [The Hideout](/the-heist-docs/how-it-works/the-hideout.md) for how that gets claimed and taxed).
  * **Half** gets sold directly into the pool for WETH. That sale has to clear at least 95% of fair value on-chain — no matter what slippage tolerance was set for the transaction — so a thin, manipulated pool can't be used to force a lowball sale. If it can't clear that bar, **the whole check cancels**: nothing gets created, nothing gets sold, and the same check just runs again next time.
* **Below target, the Printer does nothing.** There are no IOUs, no promises, no "we'll make it up later" in this protocol. If the market doesn't value LOOT above target, nothing gets created — full stop.
* **Where the sale money goes** depends on how deep the protocol's own liquidity already is. While it's still below target depth, 80% of the sale goes to [the Floor](/the-heist-docs/how-it-works/the-floor.md) and 20% goes toward deepening [the protocol's own liquidity](/the-heist-docs/how-it-works/protocol-owned-liquidity.md). Once that target is reached, it automatically switches to 100% Floor.

## Why a second limit based on pool size

Here's a failure mode that's sunk similar protocols before: a small, shallow pool can show a huge *percentage* premium off almost no real trading. If the amount created only looked at that percentage, the protocol could try to sell far more into the pool than it can actually absorb — crashing the price the moment that sale hits.

{% hint style="success" %}
**The Heist closes that gap with a second, independent limit: it will never create more than 10% of what's sitting in the pool, checked fresh every single time.** Whichever limit is smaller — the premium-based one or the pool-size one — always wins.
{% endhint %}

What this means in practice:

* **A shallow pool automatically limits itself.** Even a huge premium only unlocks a small, proportionate amount until real liquidity catches up — no manual intervention needed.
* **A deeper pool unlocks bigger creations — earned, not scheduled.** As the pool grows through [the protocol's own liquidity](/the-heist-docs/how-it-works/protocol-owned-liquidity.md), [farming](/the-heist-docs/how-it-works/gauge-farms-and-voting.md), and locked positions, this limit loosens on its own.
* **The sale still has its own separate safety check on top of both limits.** Even after sizing is decided, the actual sale still has to clear 95% of fair value or the whole check cancels. Three independent checks all have to line up before anything reaches the market.
* **Depth also makes the trigger itself harder to game.** Moving the price meaningfully above target costs more real money as the pool gets deeper, so a big creation increasingly requires genuine demand *and* genuine depth — one can't fake the other.

## Why no outside price feed

Every decision the Printer makes — and every tax tier elsewhere in the protocol — reads the same on-chain price record the trading pool itself produces. There's no oracle to bribe, no outside reporter to compromise, and no delay to exploit. The price the Printer acts on is exactly the price real people are creating in real time.

## Why sell half instead of all of it — or none of it

Selling all of a fresh batch would dump the whole premium on the market at once, undoing the very price rise that triggered it. Selling none of it (paying stakers only) leaves nothing to fund [the Floor](/the-heist-docs/how-it-works/the-floor.md) or the protocol's own liquidity. Splitting it 50/50 does both jobs at once: rewards the people actually holding the system together, and turns market enthusiasm into permanent, structural backing.

Next: [Trading & Dynamic Fees](/the-heist-docs/how-it-works/trading-and-dynamic-fees.md) — what happens on every individual trade, not just every 6 hours.


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