The Conversion between FAITH and MMU
Last updated
Last updated
FAITH can be swapped into MMU with and then trade on the token market freely. Other than that, MMU can also be spend to redeem some virtual items to increase the earning power of the MetaBoom, or keep FAITH to redeem non-earning related items to showcase your music-side of personality.
The conversion rate between FAITH and MMU is determined by the algorithm that solely depends on the supply and demand concept.
The algorithm will look at following factors to determine the change of the conversion rate:
T : Amount of this swap transaction
adR : adjusted rate, initially at 10
S : Slippage safe multiple
F : Total FAITH pool that can be swapped
L : Liquidation safe multiple
The algorithm will calculate a spot conversion rate based on the simple concept similar with what banks use to deal with foreign exchange rate for consumers.
The formula is :
adR = previous adR * [ 1 + or - ( T / F ) + S + L ]
where + means when swap FAITH to MMU, and - means swap MMU to FAITH.
The amount of tokens a holder would get = T * adR.
The difference between the actual token conversion and the initial token conversion would be add back to the F to create a new adR.
Liquidation safe multiple (L) will kick in when the daily swappable MMU/FAITH pool is reaching to some critical amount. It will adjust the formula and affect the conversion rate drastically. It will be a hourly cap and will restore back to normal over times.
When the market is rational where no unusual swap occurs, L=0 ; versus when some unusual demand of swap occurs that cause the daily swappable pool become extremely low (or high), L will be bigger than 0 and affect the conversion rate in an obvious way.
The whole concept of the design of this algorithm is to make sure FAITH is relatively stable and not a speculative token in nature.