tETH is Now Live: Current tETH Mechanism and EVN Price Floor
The long awaited event has finally happened, the tETH mechanism is now live and fully functional. The delay in launching tETH came due to the very unique nature of this mechanism. The audit took some time to complete and after its completion we had to make some adjustments to tETH based on our findings from the audit report.
The adjustments made to tETH means it will operate slightly differently from originally intended but the end result is the exact same. The end result of tETH was and still is to sweep excess liquidity below the price floor of $EVN tokens and use them for token burns & buybacks.
The team carried out the adjustments of tETH to ensure it could be securely made ready as soon as possible. This report will explain how the adjusted tETH mechanism functions.
The price floor of EVN tokens is mentioned multiple times in this article so it’s important to give a description of what it is. The price floor of EVN tokens is the lowest possible price EVN tokens can drop to. To understand how that’s possible it’s necessary to explain how the price floor came into being in the first place.
On Feburary 9th, 2021, Evolution Finance had a token generation event (TGE) for its dual token economy (more details on Evolution’s dual token economy) consisting of $EVN and $EVNY tokens. $EVN tokens are the ones that have a price floor and this price floor for $EVN tokens was created through the minting of $EVNY tokens. Please note that all EVNY tokens have already been minted and we will not be minting more unless it is voted for by governance.
To mint $EVNY tokens during their TGE people had to deposit ETH in Evolution smart contracts (SC). The Evolution SC took half the deposited ETH and used them to buy EVN tokens. After purchasing EVN tokens the Evolution SC deposited all the EVN tokens along with the remaining ETH into the EVN/ETH Uniswap liquidity pool. Finally, Evolution SC took all the EVN/ETH Uniswap LP tokens and locked them in the Evolution vaults.
With EVN/ETH LP tokens locked in the Evolution vaults there will always be some liquidity in the EVN/ETH Uniswap liquidity pool. This supply of locked liquidity created the price floor of EVN tokens.
A simple calculation of the EVN price floor can be done by taking all the EVN in circulation and adding it as a “sell” to uniswap. Utilising this method you will see a “price impact” measured as a %. If you remove this % from the current EVN price you will have the current EVN price floor.
Current tETH Mechanism
As mentioned earlier, the current tETH mechanism delivers the same result as we originally intended for, but it uses a slightly different route. As a community first project we like to be completely transparent with the community thus it’s important we explain how the current tETH mechanism works.
There are 6 core steps the current tETH mechanism utilizes to deliver upon its end goal:
- The tETH mechanism uses a price calculator to calculate the price of the EVN price floor
2. The mechanism then removes a certain number of EVN/ETH Uniswap LP tokens that are below the price floor from the Evolution vault
3. tETH burns all the EVN tokens that it gathers
4. It uses the ETH it acquires to buyback EVN tokens from Uniswap
5. It then proceeds to burn all the EVN tokens it purchased
6. The tETH mechanism will continue to repeat the earlier 5 steps until it has utilized all the excess liquidity below EVN’s price floor
By carrying out the aforementioned 6 steps the tETH mechanism removes excess liquidity below the $EVN price floor and adds value for $EVN holders.
Fully Functional Token Economy
Evolution Finance has a very unique token Economy with multiple mechanisms working together to create value for the Evolution community. tETH was the last mechanism of the Evolution token economy that was required for it all to become fully functional.
tETH is the mechanism that will allow us to sweep the excess liquidity generated below the price floor of $EVN and utilize it to grow the Evolution economy.