Liquidity Balancing
Liquidity Balancing is a major innovation developed by the TETU team that minimizes volatility in the TETU token by allocating profit share to buy tokens at a low price and then shift towards adding liquidity when the token price goes up too high too fast. This helps investors feel confident in holding TETU for longer time horizons as they don’t have to worry if the TETU token price volatility will take away from the stability of their earnings over time
In our efforts to keep the price stable from launch day, the team has decided to move a part of the first-week’s Funds emission to the Liquidity Pool.
Liquidity Balancing is implemented using a smart contract that the team developed to automatically rebalance funds called: LiquidityBalancer.
LiquidityBalancer sells a portion of the available amount of TETU Tokens when the price hits the target price and immediately adds equilibrated amount of both tokens to liquidity. After each sale the target price increases.
This liquidity remains in the pool until it reaches the target TVL amount. When the target TVL is reached, the liquidity will be partially withdrawn and the token will be purchased. Every time the target TVL amount is reached, it will increase.

The Liquidity Balancer in action

The Liquidity balancer works as an automated contrarian tool that adds liquidity to the pool when there is huge TETU buying pressure or buys TETU when there are a high volume of assets being added in the liquidity pool, as a result of Liquidity balancer TETU has capital efficiency.
As an example to illustrate how Liquidity Balancer works let's analyze the following hypothesis.
TETU liquidity had begun at an amount of 100K TETU and 10K USDC for a TETU price of $0.10 and $20.000 TVL in the liquidity pool. Price action is illustrated below:
LP Stats TETU 100K USDC 10K TETU price $0.10 Total Liquidity $20K
TETU tokens experience huge buy pressure in its liquidity pool and 50K TETU tokens are bought.
All this buying pressure would drive up TETU price 200% but total liquidity pool value would only increase 50% for a total position of $15K USDC and 50K TETU tokens at $0.30 price.
LP Stats TETU 50K USDC 15K TETU price $0.30 Total Liquidity $30K
As the price reached the target price Liquidity balancer contract sells 36.6K TETU from the developer's fund smart contract to move the price back to the target price and adds both assets back in the liquidity pool.
As a result of Liquidity balancer action, there will be $15K USDC and 150K TETU at $0.10 for a total value of $30K.
The target price will be increased to 0.1% and the liquidity balancer target price will be $0.1001
LP Stats TETU 150K USDC 15K TETU price $0.10 Total Liquidity $30K
Assuming TETU token have a period of strong buying pressure and have its price target moved $0.30 the total liquidity pool value now is $90K composed of $45K USDC and 150K TETU tokens.
LP Stats TETU 150K USDC 45K TETU price $0.30 Total Liquidity $90K
Now instead of heavy buying pressure the market decides to adds a lot of liquidity in the TETU liquidity pool and $90K USDC and 300K TETU are added to the pool.
450K TETU and 135K USDC will compose the liquidity pool.
This activates the Liquidity balancer contract to reach its $100K TVL, then the Liquidity balancer contract removes enough liquidity to buy 116.666 TETU tokens for $35K.
The LP final composition would be 333.333 TETU tokens and $135K USDC at approximately $0.40 TETU price.
The target price will be updated to avoid excessive rebalancing.
LP Stats TETU 333K USDC 135K TETU price $0.40 Total Liquidity $270K
Last modified 2mo ago
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