OVR Crypto-Economics Overview

OVR has unique crypto economics when compared to other projects, thanks to the coexistence of two uncommon factors: the IBCO and real utility of the OVR Tokens (Sales). This uniqueness creates various feedback that we are going to address here.

First of all, the IBCO creates tokens when people buy and destroys tokens when people sell those back. This creates a continuous burning mechanism which does not allow for token inflation if the price does not grow, and decreases supply if the price goes down. At first sight, the token creation by the IBCO could be seen as an infinite inflation machine that will harm the price but actually the mechanism is quite different: the Bancor formula controlling the IBCO ensures that for each price increase, the amount of tokens minted decreases exponentially.

 

Basically, the IBCO token emission plateaus while price climbs up, reaching less than 30 mln emission at $10 mark. Also, while price increases, the IBCO accumulates more and more collateral that creates inertia in price movements. For example, at a price of $1 the IBCO will accumulates roughly 6 mln DAI in collateral. If you want to drive a parallel with Uniswap,this would equal to have 12 mln in liquidity on a OVR/DAI pair. Such an amount of collateral makes the IBCO price “slower” than any other markets since none of those has such a massive amount of liquidity. Finally, the liquidity on the IBCO is a warranty for token holders. In fact, it cannot be withdrawn by the team. Only 50k per month can be withdrawn and such a mechanic is granted by a DAO under the Aragon framework.

But, that’s not all, OVR Tokens also get continually consumed in OVRLand sales, lately we’re selling between 30k and 50k USD in OVRLands and all of those payments are done with OVR Tokens. Those tokens never come back into circulation continuously subtracting OVRTokens from the market. But how is that possible?

Thanks to the IBCO! Of course, OVR (the company) needs to exchange a part of those tokens to pay for development and marketing, in general this would create high velocity for the token depressing price. But, in OVR, this is not the case: as a general rule, the maximum amount of OVR Tokens converted back in DAI is 50% of daily OVRLands sales and when tokens are converted, those are sold back to the IBCO that burns the Tokens! Basically, tokens from OVRLand sale never come back into circulation and if there is a conversion that is done in the IBCO, thanks to the amount of collateral, the price impact is minimal. Does this guarantee that the price will go up? Of course not, since the price is determined by the crossing of supply and demand yet subtraction of tokens from the market adds up every day creating a very positive effect on the supply side of the equation.