We are all excited about the first IDO. I thought I would do some quick scenario analysis on what might happen to the CUB price purely from a fundamental perspective, and not speculative perspective.

I have decided to look at three scenarios

1. All existing CUB owners keep their CUB, and new investors buy cub to deposit into the IDO.
2. All IDO monies come from removing CUB form the kingdom and selling half into BUSD for deposit.
3. CUB is withdrawn from the kingdom for the IDO, but the BUSD comes from new monies.

Before we go into the details, clearly scenario 1 will increase the price, and scenario 2 will decrease the price.. but there is an interesting side effect on yield for scenario 2. That we will get into later

Scenario 3 will not change the price at all. But has a similar yield impact as scenario 2.

Scenario 1

New investors deposit $125k BUSD into the IDO, and also swap $125k of BUSD for CUB.

I am going to simplify this a little by assuming that the liquidity pools combine up to be one liquidity pool (i.e. I am assuming the BNB becomes BUSD.. this in reality happens through arbitrage bots, but makes the maths hard)

Therefore we have a total liquidity pool right now $3m, which consists of $1.5 BUSD, and at a price of $0.69 has 2.173m CUB.

At $0.69 we will swap $125k for 181k CUB (assuming no slippage). So $125k is deposited into the pool, we will have 1.5+0.125 = 1.625m BUSD.

Also, because CUB is withdrawn, we will have 2.173-0.181 = 1.992 CUB, in the pool.

Hence the new price is 1.625/1.992 = $0.82 per CUB

This represents a gain of almost 19% for the CUB price.

Scenario 2

This is where CUB from the kingdom is withdrawn, and sold to buy BUSD.

The CUB Kingdom (including Den) has $2.4m of CUB in it (or 3.478m CUB). The Den is yielding 57.93%, which means over a year an additional 2m of CUB is added to the Den.

In this scenario $250k of CUB (362k CUB) is removed from the Den, leaving 3.116m CUB. this means the yield increases to 2/3.116 = 64.2%.

However there will be a price drop when the CUB is sold for BUSD, the price would drop to $0.58 or about a 15% drop in price.

Although this scenario feels depressing, there is still higher yield to compensate as there is now less CUB in supply but the same emission rate. This might attract more buyers for CUB restoring some of the price losses, but keeping the higher yield.

Scenario 3

This is where no CUB is sold, and new BUSD enters the system, but the CUB is withdrawn from the kingdom.

As there is no selling, or buying of CUB, the price will stay unchanged, however because CUB is withdrawn from the Kingdom the yield increases, roughly halfway between scenario 1 and 2 (or about 61% APR)

Conclusion

as you can see there are many ways users might choose to fund their CUB for the IDO, and in each scenario the price impact is different, this is before we consider what happens if more CUB is bought and the IDO becomes over subscribed.. it will be interesting to see what happens to the CUB price at each point.

Overall though on average its likely the IDO will be good for CUB, either it increases yield or price, it also gives CUB and maybe even LEO finance more exposure to help grow its user base.