Karma Finance will have its own treasury which will own stable coins, LP tokens and other crypto assets such as ICX, BALN and OMM. The Karma Bond fees will supply the initial capital of the Karma Finance treasury.
The treasury will always have at least 1$ worth of stable coins for each KARMA in existence. If the amount of KARMA tokens ever comes close to the amount of stable coins in the treasury, KARMA inflation would be reduced or even paused until each KARMA token has sufficient $ backing.
The treasury will contain stable coins as well as crypto assets subject to price fluctuations. Only the stable coins will be counted towards the 1$ minimum backing ratio. Any additional crypto assets would be excluded from the backing calculations due to the volatile nature of crypto markets.
LP tokens that are in Karma Finance Treasury will ensure sufficient liquidity for swapping KARMA for other crypto assets or stable coins on decentralized exchanges (DEXs). These LP tokens will generate swap fees for the treasury.
The Karma Finance treasury will only go live once the KARMA token is launched. More specifics around the treasury and the KARMA governance token will be made available in due course.