Liquidity draining protocol explained!
Today we’d like to give you a better understanding of our liquidity draining protocol’s strenght and why it is a game changer!
1 — What is a liquidity draining protocol?
I guess it’s worth being explained again!
When you stake non native LPs on Polycorn Finance, you earn YCORN… Indeed it’s a good thing 😙 .
But the true game changer is that Polycorn Finance stakes your LPs on another trustworthy platform such as Apeswap, Quickswap, Wault or Iron Finance (more platforms are coming !) to earn their native token (Banana, Quick, Wex and Ice for now).
Contrary to other platforms, the whole protocol’s liquidity is not coming from investors, funds will also come from outside Polycorn Finance and will therefore strengthen the whole ecosystem.
This also means that there should be more users earning money than others loosing money inside our protocol 💰 !
2 — What to do with this drained liquidity?
These drained tokens can be used for different purposes but mainly to pay an audit (which is finally coming 😱 ! You’ll have more news on this during the coming days 👀 !), provide USDC for a further YCORN pool (incentive to hold YCORN), add liquidity to stabilize the price (we did it the 3 first days for example) or… buybacks and burns to sustain the price !
3 — Buybacks and burns !
Let’s talk a bit more about buyback and burns !
You need to understand how it can guarantee a minimum ‘floor’ price for the token.
Basically, everytime a buyback and burn is made, a part of the circulating supply is bought and will never be sold (since it’s burnt 🔥).
Those burns create a rising minimum floor price !
It means that even if all YCORN tokens were sold by every holders, the price would never be less than :
[Total BuyBacks ($)] / [Circulating Supply] = current floor price of Ycorn
For example : there are currently around 1M tokens in circulation and around 4K$ of buyback have already been done : the current calculated minimum price of Ycorn is 0,004$ 😅.
Don’t be afraid and look further... Days later, with 2000 $ of daily buybacks (which would occur around 5M$ TVL… a pessimist point of view according to our TVL target !) and 10K YCORN emitted every day (the emission is reduced every 2 weeks, so this should be even less), the extrapolated floor price will be 0,18$.
But remember, it’s a minimum price considering there is 0 holder !
In reality investors hold an important part of the YCORN circulating supply and hold generated rewards as well.
It means that the extrapolated mechanical price can only be calculated on “available YCORN tokens”.
The real price of the token will be a way higher (e.g. right now around 50% of all generated YCORN are held by investors) !
4 — Total Value Locked
And now, the most important part of the explanation : TVL.
As we said before, buybacks and burns are made thanks to liquidity drained from other platforms.
Draining is made by the LPs staked by the investors and that Polycorn Finance automagically staked, using smart contracts, on external competitor platforms.
This basically means that the bigger the TVL is, the more important the drained liquidity is and the bigger the buybacks and burns are !
The last few days we had almost 1 M$ staked in our farms, draining approximately 500 $ a day. You can now extrapolate what would be the minimum price of YCORN if the TVL was 5M$, 10M$, 100M$…
This is math ! It’s a way to calculate a mechanical minimum price, without any speculation involved ! In practice price can only be higher !
Knowing all this, we hope that you should really consider farming, holding and maybe even buying (NFA ofc !) our very promising YCORN token and spreading the word !
We need you to make TVL and price moon 🚀 🔥 🚀 🌈 !
Every investor, every one of us, has the power to make this project a big success !
