The Mathematics Behind the Virtual Assets

Understanding the Mechanism of Holding Virtual Assets in the Treasury

The Market Reserves operate dynamically in response to market demand, autonomously determining the market price of WIG without necessitating any upfront capital. This approach ensures that the market price of WIG consistently remains equivalent to or exceeds the floor price, fostering abundant liquidity and encouraging the process of price discovery.

Toupée Tech employs a virtual bonding curve to manage the Market Reserves, thereby removing the necessity for upfront capital during the establishment of the floor price. This methodology engenders profound liquidity and minimal slippage for WIG from the outset, circumventing the need for external liquidity incentives. Participants can conveniently acquire and sell WIG at the prevailing market price from the market reserves at any given time. The virtual bonding curve defines a price range spanning from the Floor Price to infinity (∞), while remaining anchored to a finite supply of WIG tokens. The bonding curve initiates with the complete WIG token supply and a predetermined quantity of virtual ETH. This virtual ETH, akin to synthetic ETH, functions for accounting within the KY=K equation.

For instance, if both virtual ETH and WIG total supplies are set at 100 each, the equation would be (100 ETH) * (100 WIG) = K. Initially, all WIG resides within the bonding curve and none is in circulation. As a result, the virtual ETH remains untapped since there is no WIG available for sale into the pool.

For WIG to enter circulation, a user must initially purchase it from the bonding curve. However, at this point, there is real ETH available to be exchanged for the circulating WIG. For instance, (100 + 25 ETH) * (100 - 20 WIG) = 10,000. Now, there exists 25 actual ETH in the bonding curve and 20 WIG in circulation. If all circulating WIG were subsequently sold back to the bonding curve, the reserves would revert to the state of (100 ETH) * (100 WIG). This cycle reinstates the scenario where no WIG is in circulation and, consequently, no virtual ETH is required as liquidity.

This mechanism also serves as an introduction to elucidate how oWIG consistently remains in a favorable financial state. (Further details can be found on the following page.)