Economics of the Autobid Contract

The Autobid contract that we have developed as our token distribution mechanism offers many clear benefits from the users’ perspectives, but there are a few interesting advantages that have to do with the economic properties/implications of the model which might not be so obvious at first glance. Taking a brief moment to examine the subject and highlight some of these benefits can hopefully help demonstrate even more reasons why the Autobid model makes sense as a next-generation token sale approach.


Risk-Free Arbitrage

For as long as the Autobid contract remains active, it provides an opportunity for anyone to arbitrage between the contract and any other market where PHI is traded or exchanged. This implies that as long as the contract is active and works as expected, it establishes both a price floor and a price ceiling of 0.0001 ETH per PHI. If PHI tokens were (for some reason) being sold at a price lower than that, a buyer could accept the offer and immediately redeem those tokens using the Autobid contract for 0.0001 ETH each. Similarly, if someone were trying to sell their PHI for a price higher than 0.0001 ETH per token while the contract still had PHI available for sale, any buyer interested in acquiring PHI could use the Autobid contract to do so, instead, fulfilling their purchase at a lower market rate. In short, for the duration that it remains active, the Autobid contract allows arbitrageurs to quickly and easily take advantage of any deviations in price that manifest in the market, economically (and trustlessly) pegging the price to 0.0001 ETH per token.


Expiration

The contract only provides the above economic assurances while it is active, so the PHI price will eventually begin to float on the open market once the Autobid contract expires. The contract can expire after timing out (after 6 months have gone by) or after selling out (after it runs out of PHI tokens). In the former scenario (which assumes that the contract did not sell out before the expiration date was reached), any users who were still unconvinced that their token purchase(s) were worth the expenditures made would be free to redeem their tokens before the cutoff date, which would leave them right back where they started. In the event that the Autobid contract did sell out before its expiration date was reached, this would mean that demand for the PHI tokens at the 0.0001 ETH price level exceeded the contract’s available supply, which would imply that token holders who no longer intended to use Delphi’s tools, platforms, and services would likely be able to find someone else who was interested in doing so without much difficulty.


Minimizing User Risk

The economic properties of the Autobid contract are designed specifically to minimize risks from users’ perspectives, especially in this early “beta” stage of the project. We are not selling PHI tokens as investments or securities, but we have still done our best to make sure that anyone who is interested in experimenting with our tokens (and other tools) can do so without incurring risk of financial loss in the process. As Delphi’s platforms and oracle networks take shape, we hope that these economic assurances help to not only distinguish our project from others in the space, but also leave our users as satisfied as possible.