Limit Functions

Limit Functions are mathematical formulas or rules set within the RLBT protocol to determine the upper and lower price boundaries of the token. These functions dynamically adjust the price limits based on variables, ensuring the token remains stable and predictable within the volatile crypto market.

Types of Limit Functions:

• Constant Limit Functions: These functions set fixed upper and lower price limits that do not change over time unless updated by governance decisions.

• Linear Limit Functions: These functions adjust the limits based on a linear relationship with variables such as the total amount in the Treasury or the number of tokens in circulation.

• Complex Limit Functions: These may involve more advanced mathematical models that consider multiple variables, including market conditions, Treasury size, token velocity, and more.

  • Exponential (moved to v2)

  • Logarithmic (moved to v2)

Examples:

• Upper Limit Example: A linear limit function could be defined as $U.L. = 5 \times ( \dfrac {Treasury}{Tokens} )$. This means the upper price limit will increase linearly based on the fivefold increase of the Treasury's value.

• Lower Limit Example: A linear limit function might be set as $L.L. = 0.2 \times ( \dfrac {Treasury}{Tokens} )$. Here, the lower price limit ensures that the token’s price does not fall below 20% of the Treasury’s value.

Implementation:

• These functions are encoded into the RLBT smart contract and can be updated or modified through decentralized governance processes, allowing token holders to vote on changes based on the evolving needs of the ecosystem.