Price Floor Theory
When protocol owns its liquidity, the price floor can be assured by the total value of the collateral tokens in the treasury divided by the number of original tokens in circulation.
In the equation above, there are 2 variables that move the price floor, which make up only 4 possible price controllers.
- Treasury Increase
- Circulation Decrease
- Treasury Decrease
- Circulation Increase
We can assume that when the protocol guarantees the price floor, the tokenomics cannot break.
The Asteroid protocol has all 4 controllers.
+Treasury- Tipping Fee, Astar Dapp Staking Yields
-Circulation- Community Staking, Posting Fee, sROID Conversion
+Circulation- Creator Rewards, Vesting
-Treasury- ROID Redeem
The Posting Fee varies to auto-adjust the protocol states.
The Asteroid protocol is a gamification of the gift economy of tipping in return for voting powers.
The ROID emission into circulation is limited by the treasury value using a bezier curve.
The aforementioned theory only holds true if the collateral tokens are all stablecoins. Otherwise, there is a risk of lowering the price floor due to the price volatility of non-stablecoins.
To mitigate this risk, we can borrow some concepts from fractional algorithmic stablecoins such as Frax. Asteroid generates sROID token for the loss of the treasury value. See Protocol Design page.