“Integrated Protocol Owned Liquidity”

Typically, a new project rewards liquidity providers with more of their tokens to increase the returns beyond the transaction fees you would earn in decentralized exchanges. This concept is called “renting liquidity”. Then, someone would clone the project, increase the number of tokens given pulling the liquidity to the cloned project. This crashed the original project.

Projects like Olympus DAO (and countless clones) have solved this liquidity problem by restructuring the incentives so that the protocol owns the liquidity. High yield seekers cannot run off with liquidity at the next higher returns project. Essentially, you get a bonus in tokens on a vesting schedule for selling in to the liquidity pool. This liquidity is then owned by the protocol. It is similar to a bond and called POL’s (Protocol Owned Liquidity).

BankX has a similar system where the protocol owns the liquidity that is added by offering a bonus in BankX tokens for selling to our liquidity pools. BankX minters and stakers can be assured that there will be a market for BankX tokens and XSD.

Introducing IPOL (Integrated Protocol Owned Liquidity):

Adding to the Protocol Owned Liquidity system, BankX is the first to introduce the concept of an Integrated Protocol Owned Liquidity system. Because the BankX protocol owns the liquidity pools, it can do things to ensure sound economic policy over projects that “rent liquidity”. The IPOL system is the last line of defense to maintain an Always Net Deflationary (A.N.D.) token economy. The system does 2 things to get back to a deflationary environment when the system has identified the BankX token as “inflationary” (inflation is greater than staking):

  1. 10% of newly sold BankX tokens into the Liquidity Pool (ETH/BNB vs. BankX only) are burned by the system.
  2. 1% of the total BankX tokens in the Liquidity Pool are burned each week until the system reaches a net deflationary state.

Projects like SafeMoon “tax” token owners when they sell. BankX takes a different approach. Sellers of the BankX token capture the full value market price at the time they sell while the IPOL system burns tokens, if needed, to ensure the system remains net deflationary.

Furthermore, BankX does not charge transaction fees in our liquidity pools. Buyers and sellers of XSD and BankX are drawn to our liquidity pools due to no fees, concentrating liquidity in our decentralized liquidity pools. Because no fees are earned, there is no incentive for liquidity providers to add liquidity to pools that the BankX protocol doesn’t own. The only incentive for the market is to sell liquidity ensuring a 100% Protocol Owned Liquidity Pool structure.

To incentivize selling liquidity, the protocol utilizes bonding curves that are designed to reward earlier sellers:

Selling to the XSD Liquidity Pool:

9% Interest and Principal in BankX Tokens

1st 1/3: 1 week vesting and 5% in XSD stablecoin

2nd 1/3: 2 week vesting and 2% in XSD stablecoin

3rd 1/3: 3 week vesting

Selling to the BankX Liquidity Pool:

8% Interest and Principal in BankX Tokens

1st 1/3: 1 week vesting and 5% in XSD stablecoin

2nd 1/3: 2 week vesting and 2% in XSD stablecoin

3rd 1/3: 3 week vesting

These incentives are triggered when the value of a liquidity pool is less than 20% to the total value of the minted XSD stablecoin. The bonding curve incentivizes the amount needed to get to the 20% needed.

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