How is the price of IDON calculated?
Transparent, Predictable and Auditable Token Price.
To protect the Idoneus Economy from volatility and the constant changes associated with external economic shocks and exchange rates, the IDON will always have a minimum value of $10.00 (USD). To protect the economy within Idoneus and to avoid inflation of the value of the IDON Token, a series of rules have been established that are governed by a transparent and auditable algorithm.
Essentially, the operation of the IDON valuation algorithm requires that conditions of use and scale of transactions are met. The first one is very simple, the Token must be re-valued based on the transactions that are carried out in a certain period. If, for example, the transactions increase, the value of the token will rise. A second mechanism has to do with the scalability of the market, the more value available on the platform for 100% IDON, the more positive the impact on IDON value. Conversely, if the amount of value integrated into the platform decreases, there must be a devaluation of the token.
The IDON Token valuation model is based on the following function:
IVt = C + α ∆TTVt + β ∆TAVt
IV = IDON value at time “t” (= IDON Price)
C = Initial constant, equal to $10.00 USD.
α (Alpha) = Coefficient starts at “1”, and reduces to “0.5” when the total value of completed asset sales transactions on the platform reaches a predefined milestone.
∆TTVt = Change in the Total Transactions Value of all asset sales on the Idoneus Platform at time “t”.
β (Beta) = Coefficient starts at “1”, and reduces to “0.5” when the total value of assets available on the Idoneus Platform and 100% purchaseable with IDON reaches a predefined milestone.
∆TAVt = Change in the Total Asset Value of all the assets onboarded on the Idoneus Platform, which are available for purchase with 100% in IDON, at time “t”.
IDON is a digital currency. Its use and community generate its source of value. Thus, we have a value equation based on three major rules:
- The value of IDON will never fall below $10.00 as a basic principle, which is closely linked to the minimum volume of value existing at all times within the exchange platform, which must guarantee a minimum trade convertibility of $10.00.
- The value of IDON grows as both IDON transactions and the volume of assets available on the Idoneus Platform increase. The formula is constructed such that, without the operation of the coefficients, we have an increase in IDON valuation equivalent to:
- $1.00 USD for every $200M USD in sales transactions, and
- $1.00 USD for every $100M USD in asset value onboarded to the Idoneus Platform and 100% purchaseable with IDON.
The Alpha and Beta coefficients are then sized and applied to the formula to provide the correct incentives for both transactions and asset onboarding into the Idoneus Economy.
- In determining the size of the coefficients, and the volumes of both transactions and assets at which they apply, it is important to provide the right incentives. Therefore our chosen model encourages the incorporation of assets on the Idoneus Platform, but this incentive decreases with the size of the economy, avoiding inflation of the IDON price and maintaining a balance between the value of the token and the size of the IDON Economy and community of IDON holders.
We have chosen an approach to the model that applies a step-change in the values of the coefficients:
- The opening values of both Alpha and Beta are set to “1”.
- For transactions, the Alpha coefficient reduces to “0.5” when the total value completed sales transactions on the platform reaches $1B USD.
- For assets, the Beta coefficient reduces to “0.5” when the total value of assets available on the platform reaches $5B USD.
These effects lead to changes in slopes at different times, reducing valuation impacts and adding greater incentives to make assets available on the platform.
To learn more about the IDON pricing algorithm, the Idoneus closed-loop Economy and many other critical subjects, please check out the Whitepaper.