The starting Target Price of USDJ is pegged at 1.0 to the US dollar. In the JUST system, USDJ Target Price serves two main functions:
1. To calculate the debt-to-collateral ratio of the CDP.
2. To determine the value of collateral assets that USDJ holders will receive upon Global Settlement. In the event of market instability, a Target Rate Feedback Mechanism (TRFM) will be triggered to maintain the same denomination of USDJ. The Target Rate Feedback Mechanism is a process in which the USDJ Stablecoin System helps to adjust the Target Rate, so as to mobilize market forces to maintain the stability of USDJ price. The Target Rate determines the change of the Target Price, which incentivizes people to hold USDJ when the value is positive and lend USDJ when it's negative. Such a feedback mechanism maintains the market price of USDJ around the Target Price, thus dampening the price volatility of USDJ and injecting liquidity during demand shocks. Under the Target Rate Feedback Mechanism, once the market price of USDJ falls below the Target Price, the Target Rate will increase, making it more expensive to generate USDJ with CDPs. In the meantime, an increased Target Rate will drive up the capital gains of holding USDJ, thus increasing the demand for USDJ. In this way, the reduced supply and increased demand will push up the market price of USDJ back towards its Target Price. Likewise, when the market price of USDJ rises above the Target Price, the same mechanism takes effect by decreasing the Target Rate, and thus driving down the market price back towards the Target Price.