Cubfinance Tokenomics

Leofinance DeFi Projects

• The Leofinance started its involvement with decentralized finance on Uniswap, the decentralized exchange on Ethereum, as a liquidity provider of a wLEO-ETH trading pair. This was the height of Leo price of one dollar, during DeFi summer and the crypto bull run.

• The next Leofinance Project was Cubfinance on Binance. A unique DeFi project with its own token Cub and borrowed architecture from Gooseswap.
• The Cub token surged to over 4 dollars. It slowly came down, and currently is priced at 1.5 US Pennys.
• Most DeFi projects mirror this project token trajectory and then projects die. Token inflation is the lifeblood of DeFi projects, but it both nourishes a project in the beginning and then it smothers the project in the end.
• Successful projects survive by reducing inflation and increasing token value with a token economic policy which creates scarcity and utility which stimulates demand. Scarcity, utility, and demand result in increased token value and price should follow value.
• The Leofinance team is trying to create value with scarcity, utility and demand, with new Tokenomics.
• Below is my understanding of the new Cubfinance token economic policy, or Tokenomics.

Cubfinance Flippening 1/7

The Flippening is important because most DeFi projects pay investors with project tokens minted daily. These minted tokens are called inflation.

Cubfinance Flippening 2/7

But when investors sell large amounts of tokens, this causwes selling pressure which reduces the value of the tokens, which lowers the price of the project token over time.

Lower token price, means lower APRs for investors and more token selling, which further reduces price and this cycle eventually causes most investors to leave.

Unfortunately the last investors to enter are soon holding tokens with very low value.

Which is why so many DeFi projects eventually die when the token becomes worthless.

However some projects survive longterm by finding a way to back the tokens with assets or utility which makes them valuable.

Cubfinance Flippening 3/7

You can buy assets like Bitcoin and say the tokens are exchangeable for Bitcoin or back them with dollars. And say they are exchangeable with dollars.

Cubfinance Flippening 4/7

You can also promote the value of the token by creating scarcity. This is the buy back and burn model. The project code creates income, usually from transactions and uses the income to buy back project tokens, which are burned and not sold.

Cubfinance Flippening 5/7

In addition to scarcity to improve token price you need utility. The token must be needed to perform an essential process or to earn rewards. This utility is also called Demand. And when there is demand, demand plus scarcity raises the value or price.

Cubfinance Flippening 6/7

The utility or demand for Cub is the desire to earn high APR yields on Cubfinance farms of 20-24%. The yields are paid for staking Cub, and yields are paid in Cub. As Cub becomes scarce from more Cub being burned then minted, investors who earn Cub from staking reconsider selling today, in hopes of selling tomorrow at a higher price.

This reluctance to sell creates more scarcity by reducing the amount of Cub for sale.

So now on top of burning causing scarcity, hodling causes scarcity.

In this way scarcity from burning, and demand from staking both further increase scarcity, while at the same time increasing demand.

Now the token is in a new feedback loop of demand and scarcity, which pushes price upward.

Cubfinance Flippening 7/7

The scarcity induced by the burning, the utility and demand from staking to earn high APRs, should work together to increase value.

So now we watch and wait to see if it works.

@shortsegments

Terms Used in this article defined at LEOGLOSSARY decentralized-finance-defi
APR
inflation
token
tokenomics
Token burn