Upper Limit (minting)

The upper limit of an RLBT is a fixed or dynamic ceiling price at which new tokens can be minted. This limit acts as a cap to the price growth, curbing excessive volatility and ensuring market stability.

How Does the Minting Work?

Treasury Mechanism Each RLBT is backed by a treasury comprising various tokens such as $BTC, $ETH, $USDT, among others. The treasury plays a crucial role in the limit function that determines the upper limit of the token's price.

Upper Limit Calculation Using the Treasury The upper limit is derived from the value of the treasury. For instance, consider a linear limit function defined as $U.L. = 5 \times ( \dfrac {Treasury}{Tokens} )$

Example Scenario:

• Current Price: $1

• Total Tokens: 10,000

• Treasury Value: $10,000

With the function $𝑓=5×treasury$, the upper limit valuation would be the treasury value multiplied by 5. Thus, if the treasury contains $10,000 worth of BTC, the upper limit per token would be per token.

This pricing structure allows for minting new tokens at $5 each. If the market price rises to $5.10, it creates an arbitrage opportunity where tokens can be minted at $5 and sold at $5.10, effectively setting a cap on the price at around $5.

Flexibility in Limit Function The limit function can vary—it could be a constant, a linear function like in the example, or another mathematical form, allowing for adaptable responses to market conditions.