Stabilization Mechanism
The Mithril Cash protocol is designed to guarantee Mithril Cash tokens to be exchanged at a value of a single US dollar, with the stabilizer (in-protocol stability mechanism) in charge of matching the supply of Mithril Cash to their demand.
Every 24 hours, the time-weighted average of the MIC-USDT exchange rate is read from the Sushiswap contract, which is then fed into the Mithril Cash protocol to be referenced by its stability mechanism.
The stabilization mechanism is triggered whenever the price of Mithril Cash is observed to be above / below (1+ε) USDT, where ε is a parameter that defines the range of price stability for the MIC token. On launch, ε is set to be 0.01.

Contractionary Policy

At any point in time, Mithril Bonds can be bought from the protocol in exchange for Mithril Cash. Purchase of Bonds are performed at an algorithmically set price. With a Mithril Cash oracle price of P USDT, bonds are sold off at a price of P MIC (effective price being P^2 USDT), promising bond holders a premium when redeemed. Purchased bonds can be converted to Mithril Cash, insofar as the preconditions are met and the Treasury is not empty.
Bonds can still be purchased even when Mithril Cash trades above 1 USDT (P > 1), however this nets the purchaser a loss when redeemed. For example, when 1 MIC = 1.1 USDT, a Bond is sold for 1.1 MIC. Since all Bonds can only be redeemed for 1 Cash, this yields the purchaser a net loss. Thus, bond purchases are only expected to occur when 1 MIC trades below 1 USDT. Although bond purchases at a MIC price above 1 USD is allowed in the contract, it is disabled in the Mithril Cash frontend to avoid user confusion.

Expansionary Policy

If the price of Mithril Cash is observed to be higher than (1+ε) USDT, the system mints circulatingSupply *(oraclePrice-1) number of new Mithril Cash tokens. The issued Mithril Cash is either deposited to the Treasury or the Boardroom, depending on the Mithril Cash balance of the Treasury.
If the Treasury has a balance above 1,000 Mithril Cash, then it is logical to assume that either all bonds have been already redeemed, or no bond holder is currently willing to perform a redemption. Either way, this signals that the demand for bond redemption do not exist at this time, and thus the freshly minted Mithril Cash is given to the Boardroom contract.
However, if the Treasury has a balance of below 1,000 Mithril Cash, then it is assumed that there will be additional demand for bond-to-cash redemption. Therefore, the issued Mithril Cash is routed to the Treasury so that Bond holders can exercise redemptions.