Economics
Token Valuation Alpha Release
DEX Bonding Curve
Conceptually, the DEX Bonding Curve refers to the turnover assumptions of PL2 and the token value via decentralized markets. For modelling the different scenarios during the Alpha release phase, a bonding curve was established.
As the token allocations are distributed, the Plenny Community is assumed to continue funding the liquidity contract on the Sushi V2 DEX using Arbitrum Arbitrum One (Ethereum L2) with more WETH/PL2 and stabilizing the token exchange rate, as per the bonding curve.
Find more details: Working Paper
Evidently, community members acting as LPs can independently try to replicate the bonding curve by funding the smart contract but cannot guarantee the exchange rate when large transactions are made via the suggested liquidity contract. Therefore, the exchange rate may fluctuate much more in the short term.
For example, suppose the liquidity contract on the DEX starts at 2,000,000 PL2 with USD 12,700.00 (i.e. equivalence in WETH), assuming the currency pair WETH/PL2. USD 12,700.00 and 2M PL2 works out to a token exchange rate of USD 0.00635 per token.
Following the DEX Bonding Curve and allocating funds exclusively to the liquidity contract on Sushi V2 DEX Arbitrum One (Ethereum L2), an equivalent of USD 16.1M could be achieved if community members allocated ETH for at least 200M PL2. This assumption takes into account typical market dynamics and was calculated based on an average of USD 0.0805 per PL2.
The exchange rate of PL2/ETH assumed by the DEX Bonding Curve serves as a provisional reference point for all service fees quoted. Should the PL2 exchange rate be lower than these variables, it suggests cheaper usage of Plenny. Should the rate be higher, community members have the option of reallocating their liquidity positions via decentralized markets.
