DeFi Magic Price Floor Sweeper

What is a Price Floor

A price floor, the lowest value an asset can reach, is almost always due to some form of underlying collateral or separate asset of value. In the case of DeFi Magic on the blockchain, the calculation determining the price floor is based upon mathematical equations surrounding the supply of a token, such as Magic or Dark Magic.

Problem: Stuck Money

Once the liquidity is locked, there is a corresponding paired token also locked. On Binance Smart Chain, Magic locks to a synthetic BNB, discussed further down in this Medium. Since there is a math equation that shows how Magic cannot go below a certain price due to its locked paired BNB, that means there is “stuck” BNB in the liquidity pool that, even if all Magic tokens were sold, could never be reached. This BNB is the amount of the price floor.

The Price Floor Math

The basis of the math, from a simplification standpoint, is total tokens in the liquidity pool (cannot be sold because they’re in the LP) compared to total tokens out of the liquidity pool that can be sold. As a reminder, tokens in the liquidity pool cannot be unwrapped and removed.

  • Finite supply of Magic.
  • Burning mechanism, a transaction fee on Magic reduces the supply.
  • Locked liquidity tokens.
  • Inaccessible tokens such as in the 0x000dead address or other stuck or lost addresses.

Synthetic Paired Token

Earlier on, a synthetic BNB, axBNB was mentioned. This is related to Magic on BSC. Magic is paired to the native token of Binance Smart Chain, BNB, through a synthetic, 100% backed BNB token called axBNB.

Solution: Price Floor Sweeper

The price floor sweeper functionality is where the reward for the community comes into play.

Price Floor Sweeper Visualization

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