Lower Limit (burning)
The lower limit represents the minimum price at which the tokens can trade. Below this price, tokens can be burned to claim a base currency, providing a safety net against price crashes.
How Does the Burning Work?
Lower Limit Determination through the Treasury The treasury also helps establish a floor price for the token, acting as a safety net against price drops.
Example Scenario for Burning:
Linear Limit Function:
Current Price: $1
Total Tokens: 10,000
Treasury Value: $10,000
In this scenario, the lower limit would be set at . If the token price falls below $0.20, it presents a buying opportunity where tokens can be purchased for that lower price and redeemed for $0.20 from the treasury, thereby establishing a lower price boundary.
Mechanism of Action Token holders can burn their tokens to claim a predetermined amount of value from the treasury, ensuring that the token’s price does not fall below this calculated lower limit.
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