Buyback & LP

Buyback and burn has been a very successful and popular mechanic in the crypto space, which has historically helped token price appreciation and keeping the tokens scarce.

With the emergence of Decentralized Finance (DeFi) and AMMs, a new approach has emerged which has the core benefits of the buyback and burn approach, together with the added value of deeper liquidity - buyback and liquidity provision.

In this scenario, instead of burning tokens, they are provided as liquidity for the token on the main AMM market, providing deeper liquidity for the token.

How this works in practice:

  1. User A comes to the xHaven Marketplace and makes purchases worth 1000 XVN tokens.

  2. The Marketplace collects a 4% fee or 40 XVN.

  3. 1/10th (4 XVN) of the fee is used for buyback and LP (B&LP). The remaining 36 tokens are used to fund the platform’s operations and for the Governance Token Distribution Mechanism.

  4. Of the 4 tokens for B&LP, 2.4 are sold at the current market price on the AMM (assuming a price of 1.00 USD) and thus 2.40 USD (or token equivalent) are obtained.

  5. The resulting 1.6 XVN and 2.40 USD (or token equivalent) are posted back as liquidity on the AMM, thus providing more XVN tokens for people who want to buy them, and more USD (or token equivalent) for people who want to sell XVN tokens.

Since the above operations can be costly, xHaven will batch the B&LP operations (rather than execute them with each transaction) in order to keep them economically feasible.

In the case of XVN, 10% of all fees collected from the Marketplace will be used as funds for B&LP prior to contributing toward the Governance Token Distribution Mechanism.

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