Toupee Tech Bonding Curve
Last updated
Last updated
Toupee Tech's new token model is built on a novel bonding curve.The Toupee Tech Bonding Curve is a crucial component of the Toupee Tech ecosystem, responsible for maintaining the value of the WIG token and determining its market price through the Floor Reserves and the Market Reserves.The Toupee Tech Bonding Curve offers three significant features:
Single-sided liquidity provision: Allows liquidity provision for WIG without the risk of impermanent loss, leading to deeper liquidity pools and better price stability.
Emission of call options: Provides a sustainable emissions mechanism through oWIG call options.
Borrowing against vWIG: Enables borrowing against vWIG without risk of liquidation and no interest, creating a risk-free borrowing mechanism.
Floor Reserves The Floor Reserves secures an unchanging price floor for the WIG token, certifying that its valuation never descends beneath a predefined benchmark. This mechanism fosters stability and instills trust among participants in the system. The Floor Reserves permit the issuance of oWIG call options to gauges, which can be exercised by users to procure WIG tokens at the floor price.
oWIG (the token generated through farming) stands as a call option for WIG, featuring a strike price that equals the floor price (1 ETH/WIG) and displaying no expiration. Holders can activate oWIG by utilizing ETH to acquire WIG tokens from the floor reserves, potentially securing WIG at a price lower than the prevailing market rate. Moreover, users possess the ability to exchange WIG for the floor price (1 ETH/WIG), thereby establishing a guaranteed minimum valuation for all circulating WIG tokens.
Toupée Tech employs a constant-option bonding curve for the Floor Reserves. This bonding curve operates continuously, devoid of restrictions on the volume of reserves it can accommodate, thus facilitating an unlimited token supply. Market Reserves The Market Reserves dynamically adjust in response to market demand, effectively determining the market price of WIG without necessitating upfront capital. This curve operates to sustain the market price of WIG above or at par with the floor price, facilitating substantial liquidity and encouraging the process of price discovery.
Toupée Tech employs a virtual bonding curve to manage the Market Reserves, thus eliminating the requirement for upfront capital when configuring the floor price. This methodology not only engenders profound liquidity and minimal slippage for WIG from the outset but also eradicates the necessity for external liquidity incentives. Participants can conveniently purchase and sell WIG at the prevailing market price directly from the market reserves, unrestricted by time constraints. The virtual bonding curve establishes a price range spanning from the Floor Price to infinity (∞), anchoring to a finite supply of WIG tokens. The bonding curve originates with the complete WIG token supply and a designated amount of virtual ETH. The virtual ETH, essentially synthetic ETH, is utilized for accounting within the KY=K equation and is not obligated to back the WIG token. (Further details can be found in the "The Mathematics Behind The Virtual Assets" section.)