The One Token To Rule Them All
Are you an investor who suffered losses due to DeFi protocols poorly created tokenomics?
Well, you’ve come to the right place. Today you will learn about the potential of the One Token to Rule Them all. Backed by powerful math magic and the strongest of fellowships in DeFi, Elephant Money.
But first, to understand Elephant Money you need to understand exchanges, automated market makers, and the constant product formula which governs all cryptocurrencies.
Cryptocurrencies and Exchanges
When a company lists a cryptocurrency on multiple exchanges it may limit the price appreciation potential of that currency. It does this because it increases the liquidity and availability of the cryptocurrency on different platforms. As a result, traders can easily buy and sell that specific cryptocurrency on any of the exchanges, which means that the market becomes more efficient, and the price is less likely to move higher or lower due to arbitragers. This can create limited price action in appreciation of that coin/cryptocurrency. Stabilizing the price for a fair value.
Understanding the Constant Product Formula
The constant product formula used in automated market makers (AMM), like Pancakeswap, is designed to maintain a constant ratio between two assets in a liquidity pool in USD value. The difference between (or division) of each liquidity pool is what dictates its price!
The Constant Product Formula- x*y=k
I’ll use small numbers as an example just to show you the concept of why tokens appreciate in value.
Within an AMM, a liquidity pool holds a certain amount of each cryptocurrency, and the product of their quantities is kept constant. So, if there are 100 ETH (x) and 10,000 DAI (y) in the pool, their product (100 * 10,000 = 1,000,000 (k)) which remains constant no matter how many swaps are made.
100 ETH = x, 10,000 DAI = y
100 ETH * 10,000 DAI = k, where k is the constant
k = 1,000,000
When an investor wants to HODL (Hold on for dear life) to ETH and they only have DAI to pay with. They swap DAI for ETH on Pancakeswap.
Guess what! They just increased the quantity of DAI in the pool and took ETH OUT OF THE POOL. This increased the VALUE IN USD in ETH/DAI pair— increasing its price.
More DAI into ETH / DAI liquidity pool = Higher price for ETH relative to DAI (Price Appreciation)
Note: By providing DAI, which has a value in USD. The pool has to balance the value added between both the ETH and the DAI, thus increasing the price of ETH. The balancing of this pool is due to the constant in the product formula.
As a result, when one asset appreciates in value (dollar value) relative to the other, the automated market maker adjusts the price to maintain the constant ratio. This means that if a cryptocurrency is listed on multiple exchanges and its price starts to rise on one exchange, arbitrageurs can buy the cryptocurrency on the other exchanges and sell it on the exchange where the price is higher. This arbitrage activity limits the price fluctuations of that cryptocurrency across all exchanges, which in turn decreases the potential for price appreciation.
Switching over to Elephant Liquidity Pools
How to find the Price of a Liquidity Pool:
To find the price of a specific Liquidity pool you can divide one asset by another:
Elephant / BUSD LP on PCS is currently 14.8 cents per million tokens or 6 zeros in front of 1488… .0000001488.
Elephant in LP on Pancakeswap: 72,004,724,240,987 tokens ( $10.7)
BUSD in LP on Pancakeswap: 10,715,366 tokens ($10.7)
Note: The constant product formula is what keeps the LPs in balance. $10.7 million in each pool!
By dividing the BUSD Pooled token count by the Elephant Pooled token count you get the price of Elephant/BUSD.
Price Equation:
BUSD pooled/ Elephant pooled = price
10,715,366 / 72,004,724,240,98 = 1.48814763e-7 or 14.8 cents / million elephant tokens!
The current price of the Elephant /BUSD = .0000001488 0r 14.8 cents per million tokens.
So now you understand the underlying mechanics of how Automated Market Makers, like Pancakeswap, use the constant product formula to dictate price of a token. You may now join the Fellowship of the Bertha.
Elephant Money: Smart Tokenomics
Elephant Money is the first protocol to capitalize on the constant product formula by creating supply scarcity within a liquidity pool.
It does this in a few ways:
1. Elephant money isolates its liquidity by not being listed on multiple decentralized and centralized exchanges.
2. Elephant Money has a fixed supply. Simply, when there is supply scarcity, a small movement of tokens out of the liquidity pool (LP) will increase the price exponentially.
3. Elephant Money has a protocol owned treasury (The Elephant Treasury) that constantly buys supply by removing Elephant from the LPs of Pancakeswap.
- By NOT listing on multiple exchanges, Elephant Money capitalizes on the MATH that governs Pancakeswap Liquidity Pools i.e. the constant product forumla. It also, limits the arbitrageurs who will eat profits and keep price appreciation to a minimum.
- Elephant Money’s fixed supply allows it to take advantage of Supply/Demand price appreciation. Further down the constant product formula, which is a parabola, every additional dollar put into the LP while taking Elephant Money out of the LP will exponentially increase the value of Elephant.
- Additionally, Elephant money has a protocol owned treasury called, you guessed it, BERTHA. The Elephant Money Treasury constantly buys back Elephant Tokens and HODLs them. As a simple explanation, the more tokens held by the treasury the higher the price appreciation.
The more tokens that the Elephant Treasury HODLs the higher the price of the token appreciates, EXPONENTIALLY! True Supply and Demand Economics within DeFi.
Corporate and Elephant Money Buybacks are the same!
Just like corporations in Traditional Finance companies like Apple, HP, P&G etc. Elephant Money performs buybacks, purchasing its own asset to boost its price.
As you can see in the photo below, Elephant Money buybacks have increased to $1,200,000 over the last 30 days.
Let me say that again: The Elephant Treasury has taken $1.2 million dollars worth of Elephant out of the LP in the last 30 days!
The treasury alone has taken out 8.4T tokens from the LPs in the last 30 days. With a current token count of 134T tokens in the Elephant Treasury, we are on track to its supply scarcity mechanics within the next few months.
Below are linear projections without retail purchases (only Elephant Treasury Buybacks) :
At a current rate of 2.1T tokens per week (see chart below), Elephant will increase its treasury size to:
150T by July 7th
175T by September 26th
200T by December 19th
Giving price appreciation of:
150T = 21% Increase
175T = 70% Increase
200T = 150% Increase
Based on the current trajectory using the average 7 day token growth rate that is increasing since January due to the Elephant Futures smart contract, Elephant Money is on track to 2.5x your money by the end of the year. That is with only the Elephant Treasury buying back tokens, discounting the retail purchases that take even more Elephant Tokens out of the liquidity pools on Pancake swap.
The Fellowship of Bertha suspects supply scarcity Tolkienomics to ramp up between the 150T — 200T range.
This is the One Token To Rule them ALL. The year of the Elephant is upon us!
To go into an EVEN DEEPER dive of Elephant Money tokenomics, like The Simarillion, please watch: Bailey EMH Youtube channel.
Previous Articles:
- Do you argue with your significant other about crypto?
- Elephant Money Futures: Not the Tradfi Savings and CDs of Old
- Constant Product Formula and Automated Market Makers
- DeFi and Tokenomics
- DeFi and Risk
- DeFi Developers: 5–8% /month
If you want to see information on a smart contract called Elephant Money Futures → Link To Crypto Stu Futures Article- More in depth info on Futures and strategies: HERE (BUSD in / BUSD out — 0.5% on cash per day)
Link To Bailey EMH — Youtube Math Series- Understanding the constant product formula and Elephant Money Tokenomics: HERE
· Twitter: https://twitter.com/asignore19
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· Medium: https://medium.com/elephant-money
· YouTube: https://www.youtube.com/channel/UCBHcyR7ixP70R6hhpck1qUQ
Note: This article is not financial advice. Please do your own research before investing in cryptocurrencies.
