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Doubler Lite employs a strategy called the Generalized Martin Strategy, This is a strategy that involves doubling down on investments when prices drop. The goal is to lower the average cost of the total investment. In the context of trading, this means buying more of an asset as its price falls.
The key takeaway from this strategy is that by averaging down (buying more at lower prices), investors can lower their break-even point.
Simple Example with Ethereum (ETH):
User A buys 1 ETH at $3,000.
Price drops to $2,000; User B buys 2 ETH.
Combined, they spend
7,000on3ETH,makingtheaveragecostperETH2,333.
If ETH's price goes above $2,333, they start profiting.
Tokenization in Doubler Lite:
In Doubler Lite, for each asset inputted into the pool, the protocol separates the ownership of the cost and the ownership of the yield into Cost Tokens and Yield Tokens, and tokenizes these two rights.
Cost Tokens (C Token): Represent the cost basis of assets in the pool.
Yield Tokens (10x Tokens): Represent future yields of assets.
To-Be-Issued Tokens (E Token): Ownership of the portion of Yield Tokens yet to be issued.
Minting Tokens:
10x Tokens: Minted when the pool's average price is higher than the current spot price; no tokens are minted if the spot price is higher than or equal to the average.
E.g. If the average price (AVG) of the ETH Pool is $3,000 and the ETH price drops to $2,000 (Spot Price), User A deposits 1 ETH. Since AVG > S, User A can mint approximately: 2000 1 (1 - 2000 / 3000) = 667 10x tokens (decimals omitted). If the average price (AVG) of the ETH Pool is $3,000 and the ETH price rises to $4,000 (Spot Price), User A deposits 1 ETH. Since AVG < S, User A will not mint any 10x tokens.
C Tokens: Minted based on the spot price if it's lower than the average, or based on the average if it's higher.
When the pool's AVG > Spot:
Upon input, the number of C tokens minted = Spot * Quantity
When the pool's AVG ≤ Spot:
Upon input, the number of C tokens minted = AVG * Quantity
E Tokens: Minted in quantity when the average is higher, or based on a ratio when the spot price is higher.
When the pool's AVG > Spot:
Upon input, the number of E tokens minted=Quantity
When the pool's AVG ≤ Sot:
Upon input, the number of E tokens minted=Spot/AVG*Quantity
Inflation Management:
To protect the value of 10x Tokens, Doubler Lite limits their issuance to 10% of the Pool Cap and manages inflation to mitigate deflation impacts on these tokens.
Dynamic Redemption:
This mechanism adjusts the redemption of assets to protect the pool's average price and the interests of its users, ensuring stability and fairness.
In essence, Doubler Lite's approach is to lower investment costs during downturns and tokenize investment returns and costs to manage risks and potential profits dynamically.
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