An overview of TRUMPET
TRUMPET is a very special and unique version of what is known as an “always up” smart contract, meaning that the price of the TRUMPET token only goes up, never down. You buy TRUMPET tokens with TRUNK tokens, and then you exchange the TRUMPET tokens for TRUNK tokens after the price has risen.
If you’re reasonably skeptical, you’re probably wondering what the catch is; after all, how can a price only go in one direction?
Before I continue, I want you to know two things:
- Elephant.Money supports the price of TRUMPET in part by feeding it funds from Bertha, the Elephant treasury, assuring a reasonable increase in TRUMPET price over time.
- No other implementation of an “always up” contract has Bertha, and because of this most of them aren’t worth getting into, most of the time.
Here is a screencap of the TRUMPET price since its debut in March 2023:
Nice looking price curve, right?
That is in large part due to the Elephant treasury, Bertha, contributing value to the TRUMPET token. This sort of continued price appreciation is not typical of an always up contract; more typically, the price tends to follow what is known as a logarithmic curve, meaning that it starts out with fast price appreciation then the rate of increase drops off over time.
Without Bertha’s contribution, the price would look more like the graphic above; great for those who got in early, but those who buy in later see less and less price increase until it just takes too long to earn back the taxes, at which point new buyers don’t enter the contract and price growth stalls. This is why I am typically somewhat averse to these sort of contracts; unless you get in early, you’re going to have a long wait just to break even, if you have the patience for it.
That doesn’t happen here. Bertha makes sure that TRUMPET is always fed.
How exactly does this work?
This is going to get into a little math, but I’ll try to keep it simple.
Firstly, TRUMPET is purchased directly from a special contract which mints (and destroys) it on demand. It does not sit in a liquidity pool like most tokens do. This allows the contract to determine the price.
Referencing the example above, lets say the TRUMPET price is 1.00 and you want to invest 5000 TRUNK. You pay 5000 TRUNK to the contract, and in doing so you forfeit a 5% mint tax, so you get 4750 TRUMPET in return. Now the circulating supply of TRUMPET has increased by 4750, while the backing supply of TRUNK has increased by 5000.
Since the price of TRUMPET is determined by the backing supply of TRUNK divided by the circulating supply of TRUMPET, and TRUMPET is taxed at every mint and redeem, this results in the price of TRUMPET increasing at every transaction.
As mentioned earlier in the article, over time this sort of function would typically result in less and less price change for the same amount of tokens deposited. In TRUMPET however, we have Bertha perpetually buying TRUMPET tokens and immediately burning them, which causes the TRUNK supply to increase without a corresponding increase in circulating TRUMPET. In simple terms, it makes the price go up regardless of what any other buyers and sellers are doing.
More astute readers might have guessed by now that the bigger and more valuable Bertha gets, the more valuable Bertha’s contributions to TRUMPET will become. This means that as the treasury grows we can expect the price of TRUMPET to grow as well.
In conclusion, although readers would be wise to look upon most always up contracts somewhat skeptically or at least try to get in early enough to make it worthwhile, Elephant.Money has taken a different approach to the contract and made it more fair for everyone, regardless of when you start.
Disclaimer: None of this should be considered financial advice, I am not a licensed financial advisor and present this information for educational and entertainment purposes only. All crypto involves risk and typically proves most fun when you don’t invest more than you’re willing to lose. I may have a financial interest in the product(s) referenced and could benefit from your purchase.
