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📊Dynamic LP System

KERC LP Pool + Farm on Arbidex

What is an LP?

A liquidity pool is a smart contract containing large portions of cryptocurrency partners (e.g. USDC / KERC, BTC / KERC, ETH / KERC) in a farm ready to provide essential liquidity for networks (such as ArbiDex, UniSwap, PancakeSwap) that facilitate decentralized trading on automated market maker (AMM) protocols.

A liquidity miner gets rewarded with a profit percentage in exchange for supplying digital assets (i.e. KERC, BTC, USDC, ETH, etc.) to any liquidity pools connected to their wallet. The LP Miners are issued LP tokens, which are used to track individual contributions to the pool.

Why Does KERC need an LP?

We have three reasons why we believe an LP with Arbidex will provide a larger benefit to the KERC community.

(1) Extra Liquidity: KERC holders may dispose of their excess tokens on the OTC or DEX;

(2) Exposure: Greater market participation from investors will create better tokenomics and avenues for profits from the $KERC;

(3) Yield Farming: Holders will have the opportunity to yield farm (if they choose not to stake $KERC) their trading pair;

What Are Some Likely Outcomes? (a) Arbitrage between OTC and DEX markets: Holders of $KERC and Investors in DEXs can take advantage of the market pricing arbitrage of the independent systems;

  • When the OTC price < DEX price, investors and holders will have to buy tokens from the OTC, creating a buy pressure on the OTC Price and sell it on the DEX;

  • When the OTC price > DEX price, investors and holders will buy on the DEX and sell on the OTC, creating selling pressure on the OTC price.

(b) Different APY: LP Miner and KERC Stakers will be accorded different levels of liquidation flexibilities and rate of return;

In this case, LP Miners will be given ARX, xARX and wETH (by Arbidex) as a reward for their trading pair in the liquidity pool.

Can This Have Any Impact On Token Prices? The OTC Market and DEX will operate on two systems independent of each other. As $KERC is a hard cap token, it is non-inflationary by nature; the limited supply of KERC available for sale will ensure that the OTC Market Price will be sustainable.

The DEX Price of $KERC can influence the OTC Market Price. A few examples of how this can happen is since the DEX will allow its users to acquire $KERC with a variety of cryptocurrencies and tokens, this can increase the demand for $KERC on both the DEX, and then, the OTC Market. In addition to this, the AMM protocols underlying the LPs will also drive movements in the DEX price of KERC, and in doing so, the OTC price of KERC.

What Will Happen to the Fixed Returns if the OTC Price is Lowered? The fixed rate of return functions on the bond mechanism, the rate of return is based on the par value and has an inverse relationship to the OTC token price. Simply put, if:

KERC : Fixed Return (per month)

$2.20 : 0.75%

$1.10 : 1.5%

$0.55 : 3.0%

Therefore, the price of $KERC, whether driven by the OTC or influenced by the DEX, shall not have any material impact on the fixed rate of return distributed to $KERC staked holders.

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