Token Economics for Investors

Mechanics that allow the token to provide the utility of bonus conversion into stable Fluzcoin

During the ICO, investors will be buying an ERC20 token. This is the token that will be listed on all exchanges for trading. It will be priced at $0.10.

After the ICO, the token holder can convert the ERC20 tokens to Quorum based Fluzcoins at the rate of 1:1. The stable Fluzcoin will be used for making retail purchases. Investors will be able do the exchange at a Fluzcoin web portal (to be launched after the ICO). The turned in ERC20 tokens will be burned and in exchange they are issued the stable Fluzcoin. Regardless of when the ERC20 token is converted, there will always be a reserve for Fluzcoin for each token.

When the ICO is closed, there will be 1 Fluzcoin for each ERC20 token. As the market cap for Fluzcoin protocol grows, 25% of the staking rewards will be distributed to the ERC20 token reserve and thus the unclaimed ERC20 tokens will continue to accrue more Fluzcoin. Whenever the token holder chooses to convert their tokens to Fluzcoin, they will be issued the amount of Fluzcoin to correspond to each ERC20 token. At any point in time, the ERC20 token will be backed by Fluzcoin so it can be converted for the full balance of Fluzcoin. As the market cap grows, the Fluzcoin backing of each unclaimed ERC20 token will continue to grow in tandem.

Note: Eunomia will maintain the conversion rate for ERC20 tokens to Fluzcoin based on staking rewards distributed to each token.

Every time an investor converts the ERC20 tokens to Fluzcoin the token supply goes down. None the less, the staking rewards as a percentage of the total market cap growth remains the same. Regardless of the amount of ERC20 tokens, there will be a fixed subset of newly minted Fluzcoin distributed only to the unclaimed ERC20 tokens. The staking rewards will be distributed across a smaller pool of tokens.

This design allows for the ERC20 token price to trade above exact Fluzcoin conversion rate as there is the speculative element that Fluzcoin market cap will continue to grow. Later investors will buy at a premium hoping to earn the upcoming staking rewards. As more ERC20 tokens are converted to Fluzcoin, the remaining ERC20 tokens will accrue even more staking rewards. Thus they will trade at an even higher premium, because their growth rate will be even steeper. At the same time there is the protected downside of the investor always converting over their investment to the exact exchange rate. Then they can use that Fluzcoin to buy products wherever they need.

ERC20 token price will trade above exact Fluzcoin conversion rate because there is the speculative element. As market cap will continue to grow the corresponding Fluzcoin will increase. At the same time, there is the protected downside of the investor always converting over their investment to the exact exchange rate at the time they bought. Then they can use these Fluzcoins to buy products in the retail space.

Note: The numeric example can be modeled with a dynamic calculator available on {fluzcoin.io](https://fluzcoin.io/)

Recap

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