As part of creating a thriving and self-sustaining AQTIS ecosystem, we have created several core functions that help it function efficiently. One of those is the AQTIS buyback process, which we’ll explain its purpose.
What are Buybacks?
While buybacks are a commonly used term in the world of TradFi, AQTIS has its own interpretation.
The way AQTIS harnesses this practice is part of a more holistic approach to the ecosystem we’re creating. The protocol needs tokens to query the database and thus purchases tokens from the open market to keep replenishing the AQTIS query and rewards pools.
Next to the AQTIS demand at the protocol level, we also buy back tokens from the open market according to performance. In essence, buybacks at AQTIS are a result of protocol demand.
Our mission is to create a self-sustaining ecosystem that creates value continuously.
How many tokens is AQTIS expecting to buy back?
AQTIS is creating a flexible ecosystem which means there will be periods where buybacks rise and fall depending on protocol performance.
The model we are currently working towards is: We aim to allocate 50% of the protocol performance minus our commitments for backing yield, liquidity pool management and price range maintenance. This will equate to around 15% of the performance generated by the AQTIS protocol per year that will be available for buybacks. We’ve broken down this number further below.
Wave goodbye to empty value tokens. At AQTIS we have deterministic token value, which we aim to build on over time.
How are Buybacks calculated?
AQTIS uses a performance-based approach to buybacks. That means how many tokens are purchased is dependent on how well the overall ecosystem is going.
Once the AQTIS LSDs are live and running, our goal is to reinvest the vast majority of the yield generated into buying back tokens, to help maintain a healthy ecosystem.
This is on top of other demands for the token. For example, the protocol needs tokens to query the database and thus purchases tokens from the open market to keep replenishing the AQTIS query and rewards pools.
The goal is to use 50% of the quant tech returns to buy back tokens AFTER we have satisfied our LP management and build-up of the ELIF + ELA to a 40% of Total Value Locked.
Once achieved, we are aiming to direct a significant portion of the performance of our quant tech to buybacks. This is in addition to directing yield into the ELIF and the treasury.
For transparency, we are working on the assumption that:
25% of quant tech performance will be split into three:
One-third of this figure is towards buybacks.
One-third towards ELIF
One-third towards the AQTIS treasury.
While that amount sounds small, this creates significant buy pressure on the remaining tokens available on the free market.
The calculation looks like this:
(40% - 15%) * 33,3% (split into 3): till we fill the ELIF up. After ELIF + ELA reaches 40% of total TVL: (40% - 15%) * 50%
To put that in context, if we have $100 million total value locked, with 40% effective performance, this would equate to $12.5 million in buybacks annually.
What happens to the tokens that are bought?
The tokens are re-invested into AQTIS. This is part of our mission to create a self-sustaining ecosystem that can operate autonomously and continuously.
Once the tokens have been bought back, a portion will go back to the treasury, and a portion will be distributed to LSD holders as part of the APY.
The AQTIS Token buyback feature is one of many solutions we employ to help create a vibrant ecosystem that rewards token holders from day one.
We used a performance-based system to calculate how much can be bought back at any one time, in order to create a self-sustaining ecosystem that creates value continuously.