Holder rewarding token
Boopsy (BOOP — https://boopsy.finance) was an idea dreamt up in the summer of 2020 while marveling at the success of projects like Ampleforth (AMPL) — the most prominent elastic supply token that aims to achieve a stable price by periodically readjusting the entire AMPL supply — a process called rebasing.
Ampleforth
Here’s how it works:
- When the price of AMPL increases above $1, all AMPL holders receive more AMPL (but their share of the total pie does not change).
- This causes the price of each AMPL to go down since the total supply just got inflated. (In fact, the Ampleforth smart contract automatically notifies decentralized exchange liquidity pools to reflect the new ratio).
- When the price of AMPL decreases below $1, the reverse happens. All holders lose a portion of their AMPL holdings, causing the price to increase back towards $1. The overall value of their holdings does not change.
While this is a seemingly very sensible approach for building a stablecoin, what we observed is that the AMPL price fluctuated with great volatility in the summer of 2020, and the market cap fluctuated to an even greater extent (because holders were being rewarded with additional AMPL in addition to an increasing AMPL price).
Over the course of about a month, the Ampleforth market cap grew from around $6m to over $600m (~10,000%), then dropped back to about $70m (~87%) in the coming months.
We like more of things, not fewer
Theoretically speaking, it really shouldn’t make a difference if you have more cheaper things or fewer valuable things. A positive rebase should be equal to a negative rebase — the total value of your holdings does not change.
But we are humans. We like when we get more of a thing, and we don’t like when we get fewer.
Let’s take a closer look at what was happening during this massive run up and subsequent major correction.
The top chart is the AMPL market cap in millions of USD. The bottom chart is the price of each AMPL token. The green area represents when holders were being rewarded with more AMPL (balances increasing), and the red area shows where holders were losing the AMPL that they held (balances decreasing).
So while the token price only increased by 3x or 4x, holders would have seen the number of AMPL they held grow by about 25x on top of that to reflect the total 100x gains.
During the rally, holders were not only enjoying a higher price, but more tokens at a higher price.
It is impossible not to notice: once the AMPL price rose sufficiently above $1, it triggered a series of positive-rebases (giving AMPL token holders more AMPL) which apparently led to a feedback loop of attracting even more demand for the token and triggering more and more AMPL rewards to holders.
But once the price dropped below $1, holders were abandoning ship because not only was the value of their AMPL going down, they were also losing much of the AMPL they held. A death spiral, so to speak.
This led us to wonder if there was a way to leverage the awesome power of paying out token rewards to holders, while at the same time avoiding the apparent death spiral of taking away tokens while demand is decreasing.
Boopsy
Becoming a stablecoin is not the vision of Boopsy.
In fact, we’d like it to go way up.
Our primary goal when we began work on Boopsy in August 2020 was to create a token with simple rules that incentivize adoption, both when demand is increasing and when it is decreasing.
We felt the most important thing was:
Boopsy should never ever ever ever take tokens away from its holders. Ever.
Ideally Boopsy should only increase its supply (reward its holders) when demand is increasing. The main problem we had to tackle was — what should Boopsy do when demand is decreasing if Boopsy cannot take tokens away?
How it works
Here’s what we came up with:
- Supply starts at 5m BOOP and grows to a maximum of 100m BOOP.
- When the number of holders of BOOP increases over a given day, all holders are rewarded with more BOOP. At the same time, the following reward rate is decreased because demand is already high. (Minimum: 1%)
- When the number of holders of BOOP did not increase over a given day, no new BOOP is rewarded that day, but importantly, no BOOP is ever taken away from holders.
- Instead, the reward rate for the following day increases as to attract new holders. (Maximum: 5%)
You will notice that Boopsy does not care about or make any promises around the price of BOOP. Instead, it uses a metric that it can track on its own without oracles, owners, or administrators — the number of holders holding BOOP.
The big idea
The main idea here is that we do not need to incentivize holding when demand is already increasing. A simple 1% daily rate is more than enough.
When demand is decreasing, we certainly do not want to exacerbate the problem by taking tokens away from BOOP holders.
Instead, we temporarily pause new rewards (supply expansion) and increase the future reward rate gradually until new holders appear. Ideally, these two actions would give demand some time to catch up to supply.
Let’s see how it goes.
Launch (IDO)
- The project is complete and the Boopsy smart contract has been deployed as of February 19, 2021.
- Boopsy will be launched on Uniswap on Sunday February 21, 2021 at approximately 21:21 UTC (1:21 PM PST / 2:21 PM MST / 4:21 PM EST).
- 1m of the total 5m initial BOOP tokens will be allocated to the Boopsy team for development and liquidity costs.
- The remaining 4m BOOP will be added to the Uniswap ETH/BOOP trading pair in tranches over time.
- The initial liquidity will be approximately $100k USD (in ETH) to 1m BOOP, giving approximately $0.10 per BOOP. This gives a fully diluted market cap of $500k.
- We will slowly add more BOOP liquidity over time.
Experimental software
This is an experimental project and has not been audited yet. While we have taken every measure to keep the contract simple and test it thoroughly, things can go wrong. Feel free to browse the contract source code on Etherscan for yourself.
The Boopsy smart contract is completed and deployed and cannot be changed in any way. Boopsy’s users are the only ones in control.
Proceed with great caution.
Resources
- Uniswap: https://app.uniswap.org/#/swap?outputCurrency=0x76Ed97e2F710e259EB9379Fe50B660f77d716683
- Website: https://boopsy.finance
- FAQ: https://boopsy.finance/#faq
- Infographic: https://boopsy.finance/#infographic
- Github: https://github.com/boopsy
- Twitter: https://twitter.com/boopsy_hq
- YouTube (Walkthrough): https://youtu.be/CCMHkNCCq_A
- Etherscan: https://etherscan.io/token/0x76ed97e2f710e259eb9379fe50b660f77d716683
