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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