Liquidity Backing
We're constantly working on improving our projects documentation. For now, this content is based on the pre Liquidity Backing launch but we're in preparation of providing you the best information to work with.
Introduction
DegenX ($DGNX) is set to introduce a unique Liquidity Backing feature that aims to establish an intrinsic value for the token, creating a separate backed value that grows over time.
Although the full release of the Liquidity Backing feature is still in progress, the Liquidity Backing pool is already collecting funds from the $DGNX tax. This guide will walk you through the concept of Liquidity Backing, provide a working example using given figures, and explore the impact of an increase in the value of assets stored in Liquidity Backing.
Additionally, we'll explain how the DGNX holder community has the power to choose backing assets and change the token's taxes through on-chain DAO proposals.
Working Example
Your DGNX share
Your DGNX balance:
21,000 DGNX (0.1%)
DGNX price:
$0.32
Hypthetical DGNX value in $:
$6,720
Your LB share today
| Backing Asset | $/Asset | Asset Pool Amount | Total $ Value | $ share |
|---|---|---|---|---|
| BTC.b | $28,000 | 50 | $1,400,000 | $1,400 |
| WETH.e | $1,800 | 500 | $900,000 | $900 |
| USDC.e | $1 | 2,500,000 | $2,500,000 | $2,500 |
| $4,800 |
Your LB share tomorrow
| Backing Asset | $/Asset | Asset Pool Amount | Total $ Value | $ share |
|---|---|---|---|---|
| BTC.b | $80,000 | 50 | $4,000,000 | $4,000 |
| WETH.e | $6,000 | 500 | $3,000,000 | $3,000 |
| USDC.e | $1 | 2,500,000 | $2,500,000 | $2,500 |
| $9,500 |
Summary
With the increase in asset values, your share in the Liquidity Backing pool increased from $4,800 to $9,500. This means that the minimum value of your 21,000 DGNX tokens has increased from $4,800 to $9,500, reflecting the appreciation of the backing assets. If the market value of your 21,000 DGNX is $6,720 at 0.32 USD per $DGNX, then you now have the potential for arbitrage opportunities between the market price and the Liquidity Backing value.
Additional Links
- Product Information [ pdf ]