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dmitrystas edited this page Jun 10, 2024 · 2 revisions

Welcome to the AdaHold Preview Testnet Wiki!

About AdaHold

AdaHold is a truly decentralized token on the Cardano blockchain. The minting and burning of AdaHold as well as AdaHold price are controlled by Plutus smart contract. If you need more technical info about AdaHold tokens like Policy ID, Smart contract address, etc, please visit Token Info Wiki page

Benefits for holders

The smart contract features described above are very important because they allow AdaHold holders to receive voting / staking rewards for ADA they paid for minting AdaHold just as if this ADA is in their wallet. Moreover, if AdaHold holders decide to redelegate their ADA to another pool, the ADA they paid for the AdaHold token will also be redelegated automatically. This can be particularly interesting for pool owners whose stake is used as a pool pledge. They can hold AdaHold tokens instead ADA and not to break pledge!

What holders should do

Just hold, that's all! The AdaHold holders goal is to hold the AdaHold tokens as long as possible.

How it works

When users buy (mint) AdaHold tokens they send appropriate amount of ADA to a treasury. No protocol fee is charged at that time. Users receive exactly the number of tokens for which they paid ADA. Additionally, users have the option to choose whether or not they want to continue receiving staking/voting rewards for Ada they used to purchase tokens. If they choose to 'Continue Receiving Rewards', they will continue to receive rewards for ADA they paid to treasury for minting AdaHold, just as if ADA is in their wallet. When they sell (burn) AdaHold tokens, they incur a protocol fee. The protocol fee is directed to the treasury, thus increasing the AdaHold token price. In case 'Do Not Continue Receiving Rewards', there is no protocol fee at the moment of token burning. This means that in this case the users pay no fee neither during the token minting nor during the token burning. Instead, staking/voting rewards for ADA they initially sent to the treasury for token minting, accrue to the treasury, contributing to the AdaHold token price appreciation. Thus, in both cases, the AdaHold token price is constantly growing, and never decreases. Those holders who wait long enough will sell tokens at a higher price than they bought. The holder who holds the longest will take the whole treasury accumulated by all the time.

Simple example

In case the text above sounds a little unclear, let's break it down with a bit of straightforward math. Let's assume we are on the start - the treasury is empty and no token is been minted. The initial token price is 1 AdaHold = 1 ADA. The protocol fee is 3%. All users choose option A (Continue Receiving Rewards)

  1. Alice, Bob, and Clair each minted 100 AdaHold tokens, paying 100 ADA each. There is 300 ADA in the treasury. Each of 3 users has 100 tokens in their wallets, 300 tokens total. It's important to note that the minting process does not directly affect the token's pricing dynamics. So, after minting, the price remains at 1 AdaHold = 1 ADA.
  2. After some time, Clair decides to sell (burn) tokens. As we mentioned, the price is 1 AdaHold = 1 ADA, so she receives 100 ADA for them. However, there is now a protocol fee, so Clair pays 3 ADA to the treasury and receives 97 ADA to her wallet. Here's where the magic happens: the AdaHold price increases from 1 ADA to 1.015 ADA per token. Why does this happen? Because now the treasury holds 203 ADA, and Alice and Bob both have a total of 200 tokens. Therefore, the token price is 203/200 = 1.015 ADA per token.
  3. Next, Daniel (a new potential AdaHold holder) decides to mint 200 tokens. Remember that the price is now 1.015 ADA per token, so Daniel pays 203 ADA. There is 203 + 203 = 406 ADA in the treasury now, and Alice, Bob and Daniel have a total of 400 tokens. After minting the AdaHold token its price is still 406/400 = 1.015 ADA per token (remember that the minting process does not directly affect the token's pricing dynamics).
  4. After some time, Daniel realizes he can't hold the tokens any longer and decides to burn them to get ADA back. Daniel sells 200 AdaHold tokens at a price of 1.015 ADA, receiving 203 ADA and paying 6.09 ADA protocol fee to the treasury. After this, the treasury holds 406 - 203 + 6.09 = 209.09 ADA, and Alice and Bob have a total of 200 tokens. So, the AdaHold token price is 209.09 / 200 = 1.04545 ADA per token.
  5. Some time later, Bob also decides to sell his 100 tokens at price of 1.04545 ADA per token. Bob receives 104.545 ADA and pays 3.13635 ADA protocol fee. So Bob gets 101.40865 ADA back in his wallet. The treasury now holds 209.09 - 104.545 + 3.13635 = 107.68135 ADA, and Alice has 100 AdaHold tokens.
  6. Eventually, since Alice is the only one remaining, she burns her 100 AdaHold tokens and claims the entire treasury of 107.68135 ADA.
  7. Congratulations to the winners! Alice and Bob hold AdaHold tokens long enough to sell them for a higher price than they bought.

Extra bonus

The example above doesn't take into account the fact that the protocol fee users paid to the treasury is also involved in staking, and the rewards for it go directly to the treasury. Due to this the price of the AdaHold tokens is constantly growing even if no one burns them. In addition, users receive staking/voting rewards for Ada they paid for minting AdaHold tokens, as long as users hold them.