MultiToken: Tokenomics
Investors and their consultants spend a lot of time identifying investment objectives and developing an investment strategy. Portfolio rebalancing is one of the critical moments in asset management regarding modern portfolio theory. This process helps to restore the original proportions and reduce the level of risk to the planned values. It helps the investor to less painfully survive the fall of markets and to be on the best positions for achieving long-term financial goals.
Automatic Rebalancing. Arbitrage
The MultiToken developers concluded that when creating a MultiToken, it is possible to keep the proportions of assets automatically, with the help of arbitrators — those who are trying to buy cheaper and sell more expensive. Now they are actively working everywhere, so the prices for cryptocurrency on all exchanges are leveled. For example, if you look at the cost of the Ethereum for Bitcoin, it will be almost the same everywhere, maybe with a deviation of 0.5%, which is very insignificant. The prices differ only in relation to the dollar. If the exchange works with real dollars, the exchange rate depends on its location. For example, at the exchange in Africa, the rate can be $ 40,000 for Bitcoin, while in America — $ 6,000, etc. High competition among arbitrators leads to the fact that exchange commissions become as minimal as possible.
Let’s look at an example of who and why rebalancing your portfolio. Say you want to exchange tokens A for tokens B. Given the ratio of their values, the current number of tokens A and tokens B, a smart contract displays a formula that gives you a certain amount of tokens B. And then there is one BUT: the smart contract does not take into account change in the value of tokens. The benefits of all coins (the number of tokens multiplied by their price) are in the proportions that were specified in the contract initially.
Any user can come and add a few cheap tokens to the smart contract, getting more expensive at the old price. Thanks to this operation, the owner of the coins receives the benefit, which is scaled depending on the situation. Due to such an exchange, the user changes the number of tokens on the contract, thereby correcting the price for the actual one, that is, the person who tries to earn on the difference in the course of such actions sets the correct price in the smart contract.
Bancor and MultiToken
There are companies like Bancor, which allows you to increase the liquidity of specific tokens in their exchanger, creating smart contracts with a rebalancing of 1:1. When buying a so-called multitoken of this company, you necessarily acquire their coin (BNT), through which the process of exchange of tokens occurs. But this company has another disadvantage — rather large transaction fees due to complex formulas associated with the instantaneous infinitely liquidity of their token.
MultiToken team offers users the opportunity to use multitokens more efficiently. Firstly, the creation of such a marketplace, where users can buy absolutely any multitoken. Under such conditions, the rebalancing of assets instead of smart contracts is carried out by arbitrators or ordinary users. For example, if a user wants to buy a multitoken for an ETH, first he has to buy its sub-tokens in the right proportion, then creates a multitoken, putting his tokens into it. Or if someone wants to sell the multitoken and get the ETH, He have to: burn the multitoken, get the sub-tokens and then change them on the ETH. In fact, all this is happening outside the user’s field of vision, and using the marketplace is not much more difficult than buying a product from an online store. Still, MultiToken offers to conduct all these operations through its system, as a result of which holders will receive a permanent 0.2% commission from all exchanges that pass through multitokens purchased on the Multitoken exchanger.
Token MTK
With such a large number of multi-cells available, the following problem may arise: if the user wants to exchange tokens, but there are hundreds of contracts in our network that are suitable for this operation, which one will be chosen for the exchange?
The developers of MultiToken team decided to make this choice randomly. The likelihood of a multitoken to be chosen depends not only on the number of tokens that the user receives in response but also on the number of MTK tokens inside the smart contract. Token MTK — own unique MTK.One’s token. If we compare such two contracts, where there are two times more MTK tokens than in the other, then through the first one there will be a larger (2 times) volume of all exchanges on our platform for a specified period. As a result, the owner of such a lucrative contract receives twice the amount of commissions.
Having MTK on a multitoken, the investor will receive % of the commission always. This is not a one-time offer, every user, as if, owns a part of the system, provides liquidity to this fraud and receives a reward for it.
