Dynamic Coin Offerings (DYCOs)
Token Offerings that dynamically adjust to demand
Last updated
Token Offerings that dynamically adjust to demand
Last updated
Dynamic coin offerings are new form of offerings native only to SAFU.io inspired by DAO Maker.
If project owner selects DYCO then a portion of the raised funds is used to collateralise the new native coin for a predetermined period. During this period the token has ZERO inflation, to maintain the collateralization.
The minimum required collaterlization for all DYCOs on SAFU.io is 65% up to 97.5%. Meaning between 65% and 97.5% of the raise will be locked into a refund contract on TGE.
The full collateralization of all circulation tokens ensures that all DYCOs have a price floor below their listing prices. Stablecoins and the way down, IDO on the way up.
DYCOs are the perfect fundraising model for tokens as they protect the users via a liquid price floor, incentivise the developers, align interests of holders and team and dynamically adjust metrics over time.
Token creators define the refund ratio and the refund duration. As an example we will take a 70% refund after 100 days. They raised 100k BUSD and sold 100,000 SAMPL for $1 per token
During these 100 days SAFU minter will ensure that there is no increase in circulating supply. After 100 days any token holder can send their tokens to the DYCO contract and receive $0.7 BUSD for every deposited token.
Token lists and dumps on opening down to $0.65 per token. Someone is willing to sell their tokens cheap because they do not want to wait 100 days. The token is now below the refund price, creating risk free arbitrage of 5%. The SAFU protocol will then buy these tokens from the user and after 100 days refund these from DYCO contract and generate 5% profit.
The user effectively was able to sell their tokens at a loss of -35%, even-though the team was exit scammed. If the user would have waited 1 year then they could have retained 70% of their investment. At the same time the DYCO protocol generated revenue that will be distributed to all holders.
The tokens are then automatically burned, increasing the value of the token for all those that did not refund their tokens.
Token lists and dumps on listing, however the team works and after 50 days the token price goes all the way to $1.2. As before the SAFU protocol buys the tokens at $0.65 however instead of refunding the token via the smart contract it sells the token as soon as the token his $0.75 cents generating a 10% project.
After 100 days the token holds above $1.2 the SAFU contract has no incentive to deposit tokens at a loss during the refund period. The remaining $70,000 BUSD are then sent to the team wallet. If the users generate returns then the team gets more money.
DYCOs can have up to 3 refund tranches. If the token price is below the refund price, all refunded tokens are burned.
Example
Refund Period: 100 days
Total Refund: 70%
Total Raise: $100,000
Price per token: $1
1st refund 20% after 33 days
2nd refund 25% after 33 days
3rd refund of 25% after 33 days
Token price is 0.2 cents after the 30 days. 70% of circulating supply is sold by holders and bought by the SAFU protocol for 40,200 USD. After 33 days the protocol deposits 28.6% of tokens (20% of 70% = 28,6% of 100%) and receives $20,020 BUSD. The 28,600 SAMPL tokens are then automatically burned.
Circulating supply with holders: 30,000
Supply with protocol: 41,400
After the refund the price of the token increases due to the burn and after 66 days the price is now $0.6 BUSD per token. Another 14,000 SAMPE tokens were sold to the SAFU Protocol. SAFU Protocol burns 35,714 by depositing these into the refund contract and receives 25,000 BUSD.
The protocol now generated profits and circulating tokens are reduced.
Circulating supply with holders: 16,000
Supply with protocol: 19,686
Due to the very low circulating supply, price finally goes above the refund price all the way to $1.05. The SAFU protocol sells its tokens at profit.
Holders that did not sell their tokens are now the only holders of the token. The total supply was reduced by 65% via the dynamic burns mechanism of the DYCO.
When a token increases in value above the refund price in both price and volume, holders or the SAFU protocol have no incentive to claim the refund collateral. The less money is claimed the more money goes to the token creators.
If the creators fail to keep the price above the refund price for the first tranche they can still have the opportunity to retain the remaining collateral by improving their value drive for the next two tranches.