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The XVIX token is a new kind of financial instrument that stores value as its price increases. This allows it to have a continually rising floor price against ETH. Anyone can redeem their XVIX tokens for ETH at the floor price at anytime.
The floor price is calculated as:
0.9(ETHinFloor)/(totalSupplyOfXVIX)0.9 * (ETHinFloor) / (totalSupplyOfXVIX)
The Floor is an Ethereum Smart Contract and always behaves according to this specification.
Looking at the formula, there are two main ways for the floor price to increase:
  1. 1.
    More ETH in the Floor
  2. 2.
    Less XVIX
More ETH
XVIX can be minted using ETH at a price that follows a bonding curve. This just means that as more XVIX is minted, the price to mint also increases.
All ETH received from this minting is sent to the Floor.
Every transfer of XVIX burns 0.43% of the XVIX transferred.
Additionally, 0.02% of XVIX tokens that are not in vaults or Uniswap liquidity pools are burnt every hour.
These properties decrease the supply of XVIX while incentivising providing liquidity for XVIX.
Selling to the Floor
The 0.9 factor in the floor price calculation means that selling XVIX to the Floor will cause the floor price to increase. An example:
  1. 1.
    If there is 100 XVIX in circulation and 100 ETH in the Floor
  2. 2.
    The floor price is 0.9 * 100 / 100, or 0.9 ETH per XVIX
  3. 3.
    Selling 1 XVIX to the Floor would give you 0.9 ETH in return
  4. 4.
    Now the floor price would be 0.9 * 99.1 / 99, or ~0.9009 ETH per XVIX
If XVIX is sold in batches of 1000, each batch would get more ETH than the previous batch, and the last batch would get ~67% more ETH than the first batch.
Avoiding Burns
There are 3 options to avoid the 0.02% hourly burns:
  1. 1.
    XVIX / ETH UNI: Provide liquidity to the XVIX / ETH Uniswap pair, tokens here have zero burns. Note that there is a risk of impermanent loss with this option. IMPORTANT: use the dashboard for this option as doing so will avoid the 0.43% transfer fee. You can also stake your Uniswap LP tokens and receive 50% of all X2 fees.
  2. 2.
    Burn Reduction Vault: XVIX tokens in this vault have 0.01% hourly burns and no withdrawal delay. Tokens deposited here are automatically staked and will receive 10% of all X2 fees.
  3. 3.
    Timelock Vault: XVIX tokens in this vault have zero burns and a withdrawal delay of 7 days. Tokens deposited here are automatically staked and will receive 5% of all X2 fees.
These options are all accessible from the dashboard.
Overall Benefits
The tokenomics of XVIX lead to a few benefits:
  1. 1.
    By allowing minting, value is permanently captured when the price of XVIX increases
  2. 2.
    The captured value raises the floor price and provides a safety net for all XVIX holders
  3. 3.
    Short term sellers of the XVIX token are penalised through hourly burns which further increases the floor price
Note that the floor price is in ETH, so the safety net follows the price of ETH.
The XVIX token also receives fees from a leverage platform called X2.
Useful Links
Last modified 2yr ago