Users can enter the Ally app at anytime to mint or redeem wAlgo, and earn Ally rewards. The following diagram shows how the wALGO pool works.
Depending on which period a user chooses to mint or redeem, there is a slight difference in the mint price of wAlgo and the redeem value of Algo. There are two distinct periods: 1) governance commit period 2) non-commit period.
During the 'governance commit period' between collecting governance rewards from period X, and committing to governance for period X+1, any user can mint or redeem wALGO at the current price. The current price is the ratio of [ALGO in the pool]/[wALGO outstanding].
After the pool commits to governance, users can still mint. However, they will not be earning governance rewards. In order to avoid diluting the governance rewards for the committed ALGOs, the pool will sell new wALGOs at the next redemption price - a price shown by the green line. This price includes our best estimate of the value of the coming governance rewards. We will add ALLY rewards to compensate buyers for the lost interest and put them approximately on track to receive the earnings that are shown by the blue line.
If there is a period of market stress and users want to redeem wALGO for ALGO, they can redeem at a price shown by the red line. This should always be within about 3% of the current ALGO value of the pool. The pool will redeem from a series of smaller “vaults” so that it does not lose governance rewards for non-redeemers.
After the pool earns governance rewards for period X+1, the pool collects all of the ALGOs, including the rewards, charges a small fee, and opens up minting and redemption at the new value of ALGO/wALGO.