Value Reflection & Value Loading In Digital Notes
Synthchain WP (3)
Digital notes can be expressed in the form of any token with a smart facility where the escrow function in the token’s smart contract or similar facility represents a possible storage place for any sort of crypto value for a period of time. Digital monetary instruments, as for any monetary instrument, rise in value the higher the value of the goods they purchase rise in price. This is not a well-understood process, but it is a process we have identified in both real and in digital economies. It is easier to identify in digital markets due to constrained supply of digital assets, making such trends more noticeable. We can call this scenario where a type of value is conferred onto the currency as a result of the currency being able to purchase an asset of a comparatively higher price value for what it is: reflection.
Value reflection is still not very well understood. An example is where 100,000 tokens are enabled to purchase 100,000 shares of a company at the value of $5 per share. In such a case, the tokens would immediately have $500,000 of reflected value. If they did not, someone else would simply purchase the tokens under that sum and then use them to purchase the shares which they would sell for a marked-up price to make an arbitrage profit.
When a smart contract holds Ether inside it, the value reflection of the ETH reflected on the price of the proxy digital note holding it securely is essentially internally-reflected value that is somehow part of the character of the digital note. The process by which this value reflection comes about however does so slightly differently to that of most currencies, for it is only created at point of purchase.
Thus, value loading is the term we use to describe the moment when ether (or whatever other digital asset is being employed as the unit of purchase) is sent to the smart contract, safely-stored there and where the newly-issued digital note is simultaneously sent from the same smart contract to the purchaser with the additional utility of being re-exchangeable at some point with a greater or lesser amount of that initial purchase asset.
