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Float Protocol still needs to prove its market demand, but relative to interest rate adjustments, the fidelity of the anchoring mechanism of Float daily auctions may be higher.
Further reading: ” NGMI Capital: Valuation of FLOAT and BANK through auction assumptions and models “
Written by: Will Sheehan, Founder of Parsec Finance Translation: Lu Jiangfei
Last weekend, the cryptocurrency market seemed very chaotic. But in this environment, a brand new stablecoin was issued-FLOAT. Users who pledged in a single BANK pool and participated in the creation of FLOAT can claim FLOAT tokens, and BANK tokens can be pledged in one pool. At the same time, there will be about 1 month to obtain BANK token rewards (additional pledge is not allowed after the token is issued). Starting at 6 o’clock on May 17th, Float Protocol’s newly opened FLOAT-ETH pool will reward 1,200 BANK per week within 4 weeks, and a single FLOAT pool will reward 100 BANK per week.
At the beginning, the price of BANK/ETH increased by about 10%, because most of the BANK tokens pledged for the creation of Float were already in the pool a long time ago.
However, after the creation of Float, the price of BANK has been falling. Of course, the price of ETH has shrunk by 20% during this period. In addition, due to the FLOAT protocol for liquidity mining, more BANK tokens have been minted, which has been held by some medium-scale The sell-off of people.
The creation participants had pre-exchanged stablecoins or ETH into FLOAT before the release, and about 4 million FLOATs were pre-exchanged. Up to now, most of the pre-exchange FLOAT has been minted and extracted.
Now let’s look at FLOAT again. From the perspective of volume, FLOAT seems to have stabilized overall, but the total volume is not very high. However, the high/low fluctuation range is only about 35%, and most of the transaction volume occurs during auction transactions.
The main anchoring mechanism of FLOAT is “daily auction”. From the figure below, we can see that the buyer entered when the auction was about to end, and finally achieved the target price of FLOAT (about 0.000453 ETH) at the end of the auction.
For the FLOAT agreement, there is still a lot to prove (especially on the demand side), but relative to the interest rate adjustment (the mechanism used by RAI), the fidelity of the FLOAT auction mechanism may be higher. I still believe that in the long run, the DeFi industry should focus on such floating anchor tokens.
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