A company before minting their first Branded Tokens (BT) can set the exchange rate of OST to BT at any rate they desire, but once they set it, it is fixed and cannot change. This ensures that companies don't change the rules on their customers.


So, let's say OST is trading at $1, and you set your exchange rate to 1 OST = 1000 BT. Then, each of your BT is initially worth $0.001.


The price of the BT does not fluctuate on its own, as it is not tradable on secondary markets. So, each BT is always worth 1/1000th of an OST.


However, OST does fluctuate and could go to $2 or $10, or $.50.


A few factors come into play there.


First, price oracles could be used to set prices within the company's branded token economy so that even if OST goes up and down, the relative price of the goods or services in the Token Economy does not change. For instance, let's say in the example above that you allow your users to earn $.001 each time someone likes someone else's product review. By setting the value of the service at $0.01 using the price oracle, it would start off at 10BT per liked review, but would auto-adjust to say 5BT per liked review if OST rose to $2.


The other concept that can be deployed is price guarantee mechanisms. The company could sign up with a 3rd party to provide price stabilization to insulate its end users from price fluctuations. Imagine for instance if your user above, earned 100,000 BT worth $100, and then the next day it was only worth $50 or suddenly was worth $250. The user would either lose faith in the system and could start either hoarding or cashing out. With price stabilization mechanisms, the company could hence insulate its end users from wild swings in the OST price. While the company uses some percentage of upswings as buffer for the downswings, as well as the company could retain some profits from OST increases.