Range-Limited Bounded Token

Welcome to RLBT 📈! Here you'll find all the documentation about it.

Motivation

Crypto is volatile, sometimes extremely volatile. With tokens soaring to give huge returns, only to plummet days later. Much of crypto is based on speculation, especially with new projects and memecoins. So what if we could establish certain boundaries on speculation? This is why RLBT was created. To provide communities with tools designed to foster value creation and growth, while increasingly bringing more individuals into the future of money.

What is a RLBT?

Range-Limit Bounded Token (RLBT) is a token standard designed to ensure that the price of a token remains within a predefined range. This range is defined by an upper limit and a lower limit, akin to bowling with side barriers. This system allows for predictable price stability and can be influenced by various factors including treasury, market liquidity, user base, and protocol revenues.

How does it work?

The RLBT mechanism relies on minting and burning tokens using a bonding curve. This curve is essential in managing the token's price within its limits:

Upper Limit: The upper limit is enforced by allowing tokens to be minted at a set price point on the bonding curve. For example, if the upper limit is $2, tokens can be minted at this price. This mechanism facilitates arbitrage opportunities that prevent the price from exceeding this limit.

Lower Limit: Similarly, the lower limit allows tokens to be burned in exchange for another currency, ensuring the token’s price does not fall below this threshold. For instance, if the token drops to $0.49 while the lower limit is $0.50, it can be burned for a return, maintaining the price floor.

For how long?

The RLBT mechanism could remain in place until the protocol or project achieves a certain level of decentralization and/or value. The simplest approach would be to implement a time lock, ensuring the mechanism exits automatically after a predefined period.