Over the past few months we (the team) have been working hard on game development, securing partnerships and expanding the project’s infrastructure to Polygon (former Matic Network) thanks to their development grant. Now that the games are live and more are on the way, the burning of RTK has resumed, which allows us to introduce buybacks facilitated by such burns. In this article we explain how such buybacks will be implemented.
Increasing price floor
Deflationary tokens such as RTK are designed based on the principle of value increase as a result of a decreasing supply while demand at the very least remains constant, or increases. This is already a great model, but in case of deflationary tokens that rely on AMM-based trading, an often overlooked bonus of deflation is the fact that as supply decreases, assuming that liquidity remains constant, the tokens’ price floor and resilience against price volatility increase.
An increasing price floor is obviously a good thing, but even more so if the liquidity remains unaffected. Namely, liquidity providers (LPs) from the community can always withdraw their funds, but when coins are burned while the liquidity remains locked, there is simply a deterministic and ever-increasing price floor that is not subject to the unpredictable behavior of community LPs. As such, since 85% of RTK’s liquidity on Uniswap is provided by the core team and locked in a smart contract, the project is in a rather unique position to benefit from this increasing price floor, as the team can utilize its liquidity in ways that would not be feasible in other scenarios.
In order to boost the expected effects of deflation the team will capitalize on the ever-increasing price floor mentioned earlier to support the price of RTK, and will do so sustainably. As RTK is burned in the games, thereby decreasing the supply, the team will remove an equal amount of RTK from the pool and use the matching value in ETH to support the price of RTK; the RTK removed will go back to the treasury, a portion of which will be further used to support the price of AMMO.
In order to keep this rather unconventional approach trustless and transparent, the team will remove their liquidity tokens from the time-lock contract — the current contract has a 14-day unlock delay — and split the liquidity tokens in 10 equal shares, which will be time-locked in individual contracts. Each time the total supply is reduced by an amount equal to half the pooled RTK owned by each of the shares of the team’s liquidity, the unlocking procedure will be activated in one of the time-lock contracts and the team will proceed to remove 1/10th of their liquidity, and use it to buy back RTK and AMMO for the treasury.
In order to avoid pump and dumps around the buyback events, the buybacks will be take place spread out in time, without notice, and always with the purpose of supporting the price of RTK, not subsidizing a higher execution price for speculators.
All other things being equal, the implementation of buybacks facilitated by RTK burns laid out above is expected to have the following results for the project:
- Equal amount of ETH in the pool (liquidity remains unaffected)
- Equal amount of RTK outside the pool, but lower circulating supply
- Lower circulating supply of AMMO
- Lower total supply of RTK
- Higher price of RTK and AMMO
- Increased incentives to play the games (subsidized by the treasury)
- Healthy treasury to keep innovating and funding development
We do not see any downsides to this buyback program, at least not at the moment, mainly because we will only be buying back an amount of coins that has already been burned and can therefore not be sold off anymore. Nevertheless, as times goes by we will be watching closely the effectiveness of this program and making changes if necessary.
At the time of publishing this article the total supply of RTK is 835,997. From now on every single RTK burned will be bought back from Uniswap or any other AMM where RTK is officially listed.
Official website: https://ruletka.fun/
Ruletka telegram: https://t.me/RuletkaToken
All project links: https://linktr.ee/Ruletka