Impact of Deflationary Mechanisms

VersaDex incorporates deflationary mechanisms into its staking model, influencing the $VDX token's value and availability.

Token Buyback and Burn

• A portion of trading and IFO performance fees is allocated for buying back and burning $VDX tokens.

• This process reduces the total supply of $VDX, potentially increasing its scarcity and value over time.

Supply-Demand Dynamics

• The reduction in token supply can create a favorable supply-demand balance, possibly enhancing the token's market value.

• For stakers, this could mean an appreciation in the value of their staked assets and rewards.

Long-term Impact on Staking

• These deflationary actions are designed to sustain the token's value, making staking more attractive as a long-term investment.

• By aligning the token's scarcity with staking rewards, the platform aims to incentivize prolonged engagement from its users.

Ensuring Token Stability

• The deflationary approach works in tandem with emission rates and staking rewards to maintain a stable ecosystem.

• It addresses the inflationary pressure that could arise from new token emissions due to staking rewards.

Deflationary Mechanism Formula

• Buyback and Burn Rate Calculation:

  • BurnRate = TradingFeesCollected × BurnRatePercentage

  • TradingFeesCollected: Total trading fees accumulated in a given period.

  • BurnRatePercentage: Predefined percentage of trading fees allocated for token burn.

Supply Reduction Impact

• Token Supply Post-Burn Calculation:

  • NewTokenSupply = ExistingTokenSupply - TokensBurned

  • Quantifies the impact of burning on the overall token supply.

Market Value Implications

• Token Value Impact Assessment:

  • Assess the impact of reduced token supply on its market value.

Staking Reward Value Correlation

• Enhanced Reward Valuation:

  • EffectiveStakingValue = StakingReward × PostBurnTokenValue

  • Evaluates how token value appreciation post-burn enhances staking rewards.

Token Price Elasticity Analysis

• Elasticity Formula:

  • PriceElasticity = PercentageChangeInPrice / PercentageChangeInSupply

  • Measures the responsiveness of the $VDX token price to changes in supply due to burning.

Inflation-Deflation Balance Equation

• Balancing Formula:

  • NetSupplyChange = TotalTokensStaked × RewardRate - TokensBurned

  • Models the balance between inflation from staking rewards and deflation from token burns.