Floor Price Tech
Last updated
Last updated
Onyx Lily algorithms strategically relocate, redistribute and concentrate ETH LP to the mathematically determined floor price.
The Floor can always absorb the sale of every circulating token at the floor price, even if they all were to be sold at the current floor price, all at once, the very last token sold would still sell/redeem for floor price.
Floor Price = Contract ETH LP / Circulating Supply
This is discounted via factoring the ETH LP from floor -> current price in order to keep ETH LP intact with no gaps.
When the $LILY price rises 5% (compounded each 1%) from the previous rebalance trigger, another rebalance of the protocol-owned ETH is triggered.
The ETH rebalance takes all of the ETH from below the new highest possible Floor Bin and concentrates it there.
The protocol factors in the ETH LP above the floor, when determining the current floor price. Floor rises slower, but there are ZERO gaps in LP that cause big drops in LOTUS Forks.
One component to making LILY work is ensuring RFV never decreases via burns and custom LP strategies.
Any increase in circulating supply of LILY is matched by an equal or greater increase in ETH into the pool.
There is always significant amounts of locked ETH that LILY can be swapped for.
The downside risk is known at all times.
This deep liquidity of ETH is always available for LILY to be swapped for. In many ways, this is like Olympus DAO and in this sense, LILY is backed.
The difference however, is that the RFV never decreases.
We ensure this because when LILY is bought from an initially seeded bin, it is exchanged for an equal amount of ETH.
However, we go one step further then LOTUS forks and say that it's matched by a greater amount of ETH because of the swap fees.
E.g. if there are 100 LILY tokens in the 1 ETH per LILY bin and swap fee is 1%, then it will take 101 ETH and not 100 ETH to buy all 100 LILY.
Adding that 1% swap fee as a factor to floor LP calculation is something the LOTUS forks did not have.
Onyx Lily always has proper, matching, full bins of ETH LP from floor price bin to current active price bin.
The ETH Floor Rebalance does not include bins above the new floor price bin, as to preserve the natural buyer ETH LP in the bins from floor to current price.
This avoids price whiplash issues via low token liquidity areas.