Price Floor Sweeper
What is a Price Floor?
A price floor is defined as the lowest price that a token can go and the price simply cannot fall below this price no matter what because the tokens are locked and no new tokens can be minted.
Calculation
The following EXAMPLE is for educational purposes only because the Pi Protocol smart contract calculates everything automatically:
ASSUME that the total circulating supply is 100 PIP tokens
There is 100 BNB and 100 PIP tokens in the liquidity pool
This means that the user can buy 1 PIP token for 1 BNB
ASSUME that 70 PIP tokens or 70% of the total circulating supply are locked forever in the liquidity pool
This means that there are only 30 PIP tokens or 30% of the total circulating supply that can be sold on the market
Another 70 PIP tokens cannot be sold because they are locked forever
As Pi Protocol only needs 30 BNB to manage the circulating supply of 30 PI Tokens, the project can safely take out or “sweep out” the other 70 BNB from the liquidity pool because they can never be touched
Pi Protocol can use this 70 BNB to help the project by:
Doing buybacks on PIP tokens
Add to staking pool rewards
Provide more liquidity
This is how a price floor sweeper works and the above EXAMPLE ignores the consequences of price impact.
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