Social tokens - liquidity pools
Social tokens are not worthless digital assets; they can be listed on an open market and bought and sold by other Candao ecosystem participants at any time. Holders of ST tokens must convert available funds into a liquidity pool in order to do so.
Activation process comes down to just one click, all the user needs to do is to decide how many CDO tokens should be used to build initial liquidity value (it can be as much as 1 CDO token). Once a transaction is approved, ST liquidity pool becomes available on the Candao social market. Everyone from the network can log-in, and buy ST tokens using their current market price. Because ST liquidity pools operate in the same way as traditional decentralized AMMs, the way ST token prices are calculated is similar to how Uniswap or Pancake Swap operate—as tokens are purchased, their CDO-denominated price increases. On the other hand, selling ST tokens will result in a decrease in their value.
Please refer to the following tables to see how the prices of ST tokens change as their circulating supply decreases:
Example: A rise in the price of ST tokens as a result of the liquidity pool's supply being depleted. Initial liquidity value of 1,000 CDO tokens.
ST left
CDO
Invariant (k)
Price of ST token in CDO
500
1000
500000
2
250
2000
500000
4
125
4000
500000
16
63
8000
500000
64
31
16000
500000
256
16
32000
500000
1024
8
64000
500000
4096
4
128000
500000
16384
2
256000
500000
65536
1
512000
500000
262144
0,5
1024000
500000
1048576
0,25
2000000
500000
4096000
Example: An increase in the price of ST token price over liquidity pool supply decreases. Initial liquidity value of 100,000 CDO tokens.
ST left
CDO
Invariant (k)
Price of ST token in CDO
500
100000
50000000
200
250
200000
50000000
400
125
400000
50000000
1600
63
800000
50000000
6400
31
1600000
50000000
25600
16
3200000
50000000
102400
8
6400000
50000000
409600
4
12800000
50000000
1638400
2
25600000
50000000
6553600
1
51200000
50000000
26214400
0,5
102400000
50000000
104857600
0,25
200000000
50000000
409600000
As illustrated in the tables above, the more CDO tokens used to establish the liquidity pool, the faster their value increases as a result of other people purchasing them. Nonetheless, it's worth noting that ST tokens can be divided up to 18 decimal places, which means that even if initial liquidity is established with 1 CDO token and the majority of tokens are sold at a low valuation point, people will be able to purchase fractional portions of 1 ST token, such as 0.5, 0.1, or even 0.0000001.
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