Liquidity Preservation
Last updated
Last updated
As noted earlier, the BASE token supply is managed by the TBC. Mints happen when BASE is purchased via the curve and BASE is burned when sold back into the curve. Early implementations immediately burned the BASE even while the reserve associated with those tokens were still awaiting the completion of the 21-day wait period for release to the user. Though some innovative thinking, it was realized that there was a 21-day opportunity to obtain backing for those BASE tokens prior to the burn becoming a mandate.
The development of the P2P Marketplace provided the mechanism to obtain the LUNC backing for those tokens. Once backing is procured, the BASE tokens can transition back into the circulating supply. However, if the required LUNC backing cannot be obtained within 21-days, the BASE tokens must be burned per the TBC requirements.
The procedure turned out to be quite simple and is highly effective at preserving the LUNC reserves. The required steps are as follows:
路 BASE is sold to the TBC and the 21-day clock starts
路 That BASE is segregated into a separate wallet
路 The BASE is offered for purchase to the public via the P2P marketplace. The price is set to at least the current sell price + 3%. This results in an attractive offer for buyers while still being able to provide adequate backing.
路 If the BASE is purchased, the LUNC collected is sent to the unstake wallet to be distributed to the original seller. The BASE sold is reintroduced into the circulating supply (to P2P buyer鈥檚 wallet) as it is now fully backed by LUNC again. Since the original seller now receives their LUNC via the P2P marketplace, the LUNC reserve in the TBC is untouched or restored.
路 If the BASE is not sold within 21-days via the P2P marketplace then it is burned.
The possibility to burn the BASE tokens immediately upon (or shortly after) being sold back to the TBC is still possible. This might be the best option if the amount of BASE sold back is so great that it is unlikely to sell on the P2P marketplace within 21-days.