FUTURES v11; a path to long term sustainability
Growing pains which will develop strength and resiliency.
These latest changes, while perhaps uncomfortable at the moment, should ensure the long term viability of FUTURES and thereby keep TRUNK deflationary in perpetuity. I have never been more confident in the long term capabilities of this product than I am now.
There have been some rather significant changes in the FUTURES tokenomics recently and this article aims to touch upon the major ways in which it has changed, why this should be very positive news for us all in the long term, and how best to deal with the (hopefully temporary) difficulties that some of the larger accounts are feeling at the moment.
If you’re just starting out with a smaller account, you may not even notice a problem at the moment. As of the time of this writing, an account generating under ~$7.83 daily (roughly $1500 in total value) could withdraw the full amount available weekly as normal. Larger accounts are going to face a new claim cap which is 0.5% of the ELEPHANT Treasury. If you are simply compounding and not withdrawing, you will see no difference regardless of account size.
Continued FUTURES deposits and compounds will fuel growth of the ELEPHANT Treasury, as will the TRUNK and BTC Turbines, as well as the new TRUNK Supercharger mechanism. By limiting outflows using a proportional regulator until the treasury is replenished, we give time for the system to self heal and as it does so larger and larger account holders will find themselves able to conduct business normally until it is firing on all cylinders for all participants, healing things up for the little guys first, while providing continued motivation for the larger accounts to deposit and compound rather than withdraw in a way that is not conducive to community health.
The recovery and ongoing system health of FUTURES is now entirely in the hands of the herd. Treat it well and the system will fully recover much quicker than if everyone just tries to drain it as fast as possible; this is a community bank, and each of us contributes to it. Those of us who are in a fortunate position to hold larger accounts will strengthen it for smaller account holders until it is our turn to more fully enjoy the recovery. This isn’t how finance typically functions, putting the little guy first, but we are reinventing finance.
Now, onto the nitty gritty details.
Why was this change needed?
Quite simply, the initial idea was sustainable only under certain conditions which were no longer being met, so a fundamental change in the design concept was necessary.
Let’s start with what FUTURES was, and contrast that with what it now is.
As a broad overview, early versions of FUTURES were not dissimilar to STAMPEDE. The fundamental idea was that depositor fueled FOMO would push the price of a native token (and a treasury containing it) further up a parabolic price curve faster than claims against it would erode price support. Essentially, profit and risk were spread from the depositors onto the trading public.
This works great during a bull run, but during more weak periods there existed so little buying pressure on the open market that claims were eroding the price support too quickly. The cashflow obligations were not elastic enough to adjust to changing market conditions, and so we were playing a game of chicken; payout obligations vs the treasury.
It would serve no one’s interest to simply let the payouts pump the treasury dry, so a critical change has been introduced; withdraws are now limited to once per week, and to no more than 0.5% of the ELEPHANT Treasury.
Instead of charging ahead with unfounded confidence directly at the payout obligations, FUTURES now sensibly paces itself, keeping a reasonable distance between its obligations and its inbound cashflows, always allowing a buffer zone to keep things moving, even if at a slow pace.
This will allow the Treasury time to replenish itself before bigger claims can be made. Once the well has been primed, it should prove to be much more resilient than prior versions, likely improving itself until it reaches or nears an optimum state, then it will likely remain at or near such a state in perpetuity. If the treasury should begin to drain too quickly, the cap and weekly limiter will throttle back demand a little bit until system health improves. This will all be done automatically with no human intervention.
What mechanisms have changed?
Like the previous version, v11 still uses the BTC and TRUNK Turbines which pay out 1% APR. However, v11 introduces a new mechanism called the “TRUNK Supercharger”; this receives 40% of all inbound deposits as TRUNK, applying significant buying pressure to the TRUNK token. This Supercharger is simply a treasury which pays out a 50% APR to exchange TRUNK for ELEPHANT token, thus filling the ELEPHANT Treasury. Like the TRUNK Turbine, this captures a tremendous amount of value and causes scarcity within the TRUNK circulating supply, however the Supercharger is designed to achieve much higher volume than the Turbine, 50% APR vs 1%.
The breakdown for new deposits into FUTURES is:
- 40% to TRUNK Supercharger
- 20% to TRUNK Turbine
- 10% to Bitcoin Turbine
- 10% to Rainy Day Fund
- 10% to BNB Reserve
- 10% to ELEPHANT Treasury
All of that value flowing into TRUNK should translate into significant buying pressure, with the Supercharger and Turbine causing significant scarcity. By starting this now, at the current price point, we can stuff both of them full of relatively cheap TRUNK, then as the value of TRUNK rises parabolically, so will these treasuries.
This leaves us with the claim cap and cooldown periods. By limiting maximum claim amounts to 0.5% of the ELEPHANT Treasury and limiting the frequency of claims to once per week, we throttle outflows in a way that ensures the Treasury will be available to all.
Think of it like sharing water from a community well. When times are hard and water is scarce, everyone gets a trickle. As the drought improves, those who have more invested are able to take out a bit more. We don’t let the biggest streams start claiming fully until after the smaller ones are fully restored.
What challenges will this face going forward?
There are a few challenges, however with a bit of time and some persistence from those already invested, we should be able to overcome them all.
At the moment we are facing a very small Base Yield rate, however this is directly tied to the ratio of the BNB Reserve to the Daily Liabilities. The BNB Reserve should rise with continued deposits, so this rate should improve as system health is restored; remember, we always enjoy a Personal Bonus rate regardless of the Base Yield, so frequent compounds can keep your combined effective rate very high no matter what the Base Yield is doing.
The ELEPHANT Treasury is rather small, but it is currently growing at a fast pace. When this payout cap was introduced, it dwindled down to around $8 maximum very quickly; then the cooldown period was introduced, and that increased by about 5x within a few days, currently at ~$56 as of this writing. The number may be of little consolation to those of us with bigger accounts, but the rate it is increasing by should provide optimism and confidence. With time, that maximum should grow and more and more of us will find that it no longer even interferes with accounts of our size, until even the biggest players can be accommodated.
What are the risks now?
As I see it, the biggest risks to the tokenomic concept are lack of participation, and to a lesser extent, a drastic price collapse of the underlying assets.
Participation shouldn’t be a problem; there are thousands of FUTURES account holders already, and most should be highly motivated to continue to engage with the system. Those who choose not to deposit and only make claims will be thwarted by the very low Base Yield currently offered, rendering them a minimal drain on the system until Base Yield improves. On the other hand, those who were not claiming and are merely compounding, will help to restore and strengthen the system. Those who do make some combination of claims and withdraws, will have cause to think carefully whether they wish to withdraw a discounted amount, or compound a much more generous amount while the system recovers.
As for the price of the underlying assets, ELEPHANT has very deep liquidity and seems unlikely to fall in price much further. TRUNK is a more volatile token however even after a severe liquidation event in a lending market, the price only dropped to slightly below current levels, and only temporarily; it is likely that the current price is near a floor. In short, if you have any level of confidence in the long term demand for TRUNK, a severe price drop from current levels seems unlikely. In fact, if the price were to stagnate at current levels for a bit, that would just allow us to stuff more cheap TRUNK into the Turbine and Supercharger, leaving those treasuries in a better position when TRUNK price rises.
Worst case, payouts stagnate or drop slightly until the system improves.
How soon until this gets back to maximum payouts?
That’s the question we’d all like answered but since none of us have a crystal ball, the answer is… it depends.
It depends entirely upon the behavior of the herd. The vast majority of us were already using the system in a way that was conducive to its long term viability. However others were gaming the system in such a way as to ROI as quickly as possible and make themselves a maximum drain upon the community as quickly as possible; this was never intended to be an ROI dApp, but some were using it like that.
With the most recent changes, that sort of activity, from bigger accounts at least, should be curtailed significantly.
The bigger your account value is, the longer will be your wait until the treasury can accommodate your payouts. Smaller accounts can function just fine right now and it probably won’t be long until slightly larger ones can do so as well. Much depends upon the price of TRUNK; if TRUNK moons, then the value of our Turbine and Supercharger treasuries increase significantly, restoring system health much more quickly than a flat price would.
We could speculate with some numbers but that’s all it would be, speculation. The key to understanding this is in grasping the mechanics involved. As the ELEPHANT Treasury gets turned around and heads back in the right direction, confidence will be restored and participation will likely accelerate. My best guess is that payout caps will continue to improve for some time until it reaches a balance point where some holders begin to draw down more than they contribute, then as they leave the system and new participants arrive it will likely start to climb again, repeating a similar process until finally the payout caps can accommodate even the largest accounts.
What doesn’t matter?
A number of metrics have been floating around in the chat groups, some very deceiving, some irrelevant entirely; some presented out of simple and innocent curiosity, others by people who know better and yet seek to paint the situation in a worse light than need be, for a variety of reasons.
Here’s a few things which we need not concern ourselves with:
- The TVL of FUTURES shows close to $60 million, but the treasury is so much smaller, how can it ever reach $60M?! Answer: it doesn’t need to. This is a cashflow business, the system only needs to generate payments for today’s outflows (which are adjustable), it doesn’t need to save up the entire amount in reserve.
- The theoretical maximum Daily Liabilities are almost $300k, but the treasury is so much smaller, how can it ever cover that much? Answer: Pay close attention to the words “theoretical maximum.” It has never been the case, and likely never will be, that every FUTURES participant simultaneously claimed their entire Available in one day. We don’t need to generate anywhere near that much cashflow to keep FUTURES participants satisfied and keep the ELEPHANT Treasury at a healthy level. Also keep in mind that this theoretical number is based upon every single depositor achieving the maximum rate (182.5%) when in reality every depositor will have the same Base Yield (currently considerably lower) plus their Personal Bonus; so this theoretical maximum is simply that, a made up worst way conceivable number which does not define our actual day to day cashflow requirements.
- TRUNK needs to moon for this to work! Our future hinges upon a meme coin! Yikes, now lemme FUD my own bag! Answer: No, no, and NO! Every aspect of FUTURES system health is improved with an increase in TRUNK price; a rising TRUNK will make the recovery process faster, but it is not required for this to work. In some ways, we may benefit from relatively cheap TRUNK as this recovery process begins, for it will allow us to stuff more TRUNK into the treasuries before the price rises, making our future treasuries worth that much more once the price does rise. As for TRUNK being a “meme coin”, it is much more than that, but that is the easiest way to market it to the masses, as a meme coin with utility. It is worth noting that TRUNK was a utility coin, to store value, long before it entered the meme coin arena.
But I want to see some actual numbers!
Hopefully by now you have a better understanding of how FUTURES v11 functions, and the many variables involved which affect its performance. If you do understand this, then you should see the futility of making any kind of estimates based upon the unpredictable nature of crowds before we have enough historical data to analyze.
That said, we can throw some numbers in and see what the results might be, realizing that those results will be different: based upon what the price of TRUNK is; how quickly that price changes (if it stays cheap then moons after some time it will result in a vastly different treasury than if it moons today and we’re buying more expensive TRUNK to fill the treasuries); how many new FUTURES participants there are; how many of our existing FUTURES participants choose to compound vs choose to claim vs choose to do nothing; the amount of those claims, etc. You should also notice that all of the above is ignoring larger macro trends such as the price of bitcoin, overall market sentiment which might lead to more or fewer deposits, etc.
Let’s pull some numbers out of the thin air and see what happens.
Dune analytics tells us that the average FUTURES withdrawal is $577.40, so let’s start there.
As of the time of this writing, the ELEPHANT treasury is $12,186. The cap is 0.5% of that, or $60.93.
So right now we can claim $60.93 maximum, but the average is almost 10x that amount. If we track growth of the ELEPHANT Treasury, we can see that it hit a low of ~$772 on August 28 immediately prior to the cap and cooldown period being introduced, and is now at over $12k just 7 days later. So it’s been increasing by roughly $1630 per day. This rate will likely change (up) as people gain more confidence in the system and contribute more, and (down) as they withdraw more, but let’s just go with $1630/day for now.
To withdraw the average of $577.40, the ELEPHANT Treasury must be at least 577.40/0.005 = $115,480. We already have about $12k: 115480–12186 = $103,249. So we need to come up with another $103k, at $1630/day that would be a mere 63 days.
That would permit exactly one person to withdraw $577.40; the next person after that would be able to withdraw somewhat less, or $574.51; the person after that would be able to receive a few dollars less, and so on. After 3 such withdrawals, that would wipe out the days gains for the treasury, at the current pace. However it seems likely that once system health begins showing signs of improvement, more depositors will enter the scene, thereby increasing the treasury and its daily throughput, adding greater capacity to the system. At the same time, there will be many quite antsy to make some withdraws, pushing the treasury in the opposite direction.
There is another major factor which we also cannot predict; the price of TRUNK. This affects the value being injected into the ELEPHANT Treasury by the TRUNK Turbine and TRUNK Supercharger. Currently those two treasuries combined are injecting about $647.37 daily ($78.24 from the Turbine, $569.13 from the Supercharger) into the ELEPHANT Treasury. Both of those treasuries are gaining value every day, meaning that even with a steady TRUNK price, that $647 will increase significantly as the treasuries fill. However if TRUNK were to reach $1, that number, at the current levels, would be ~$1966/day; the ATH for TRUNK was near $1.60, which would make that $3146/day. If we get some more depositor participation, that would make those numbers climb even faster.
Hopefully, you should be seeing the futility of trying to make estimates at this point. We need to wait and see, and maybe after we get some weeks of data we might make a very very rough estimate, and perhaps in a couple months, get a much clearer indication of where we stand. I would expect that most weeks, we’ll be able to process higher withdraws than in previous weeks, but there may be periods of treasury expansion and contraction along the way, sometimes it may appear that we’re going in the wrong direction for a little while, but the long view should be an eventual course correction. The bigger your account is, the longer your wait will be.
My personal take, as someone with a not insignificant balance, I would expect this to be more useful to me again in a few months but I’m not counting on it reaching the absolute maximum anytime soon. I do believe that it will get there, and much depends upon the performance of TRUNK. If the treasuries get stuffed full of cheap(ish) TRUNK for months and then TRUNK moons, it will likely restore system health much faster than if TRUNK moons tomorrow and we’re trying to fill the treasuries with more expensive TRUNK.
Hopefully this rather lengthy guide has proven to be of some use to you. We are in the middle of the ocean right now with no land in sight, relying upon navigation by the stars to guide us; those among us who lack the ability to understand our measurements, the wind, and the tide, are understandably concerned, but trust that there is a significant reason for hope; the numbers are all pointing in the right direction, even if we can’t pinpoint our destination and time of arrival just yet. We will reach land.
Also know this; the developer of FUTURES, as well as Savanna Haus itself, hold quite significant FUTURES balances. That should demonstrate all the motivation we need to have confidence that FUTURES will be steered back into calmer, more productive waters for the benefit of all.
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.
