The following is an optimized version of the original buyback model which I created. Originally it was supposed to be just market buys pushing up the price whenever a profitable trade was made and finished. A community member pointed out that this may still be tipped in the favor of short term players over the longer term holders in the month to month time frame. And so this overhaul was made to address those underlying issues because honestly, I’ll be the first to admit, I do not know and see everything. Anyway, backstory aside here is how the buybacks will be managed in the Phoenix Fund project.
The profits will no longer be used to buy immediately. Instead, closer to the NAVPU model the project is inspired by, there will be a “book value” to measure where the buyback threshold will be. Let me explain with an example:
-Trade is closed to gain 2% (let’s assign this a figure of $2,000)
-Book value is $0.0185 (due to trades’ gains)
-Uniswap price is $0.0225
-At this moment, the funds will go into the “suppression fund”
-Few hours later, the price drops to $0.0129
-Here we see a buyback happening until $0.0185 area, and until it holds.
Any and all tokens purchased until the price holds or goes above it will be sent to the burn address immediately. Proof as always will be posted on the announcements channel.
In the example, we can see that the buybacks can happen immediately, or funds saved for a later time. The suppression fund will be added to at any time there are profits above the starting capital of the project (Approximately $60k). These funds will NOT be traded. The second purpose of the suppression fund is to act as an emergency fund in case there’s a massive loss (although the trade manager will make safeguards against this outside of this measure) so the trading capital can be replenished immediately. The suppression fund acts as a buffer for any sudden drops in either capital or trading price, acting as a middle ground to re-balance each side of the project.
Now, what happens when the suppression fund is as large as the initial trading capital’s size? This is where the compounding can begin. At this point the trading gains will go fully to compound to the trading capital. This new “high water mark” will be the new capital level to be maintained. Each time this capital level rises 10%, new trading gains will then be used to replenish the “suppression fund” once again, and switching back to the compounding when they are of equal level. This will happen continuously until the suppression fund is needed for either of its purposes.
