Burning and Buyback

With AMM-protocols in the Ethereum ecosystem, buyback allocations and liquidity-providing mechanisms have emerged. They all have the advantages of the standard burn mechanism along with some added liquidity.

Instead of burning all fees, token originating from regular income becomes available for both burning and buybacks. Initially, the split is set to a 10/90-ratio: 10% burning and 90% buyback.

Plenny supports the token price through burning of LP-token and buybacks of PL2. A percentage of all collected fees is used for reclaiming liquidity and gaining reserves. PL2 is posted back to the DEX, enabling Plenny to exchange a percentage of its token income for ETH and buyback PL2 while increasing liquidity over decentralized markets and facilitating token circulation.

The replenishment flow works as follows:

1. First operation: Burning LP-token and Buyback of PL2:
   • Checks if the current fees in LP-token (i.e. SLP) are greater than the threshold for burning.
   • If the threshold for the pending fee distribution in LP-token is reached, 10% of LP-tokens are removed (i.e. burned) on the DEX to gain liquidity for the WETH/PL2 currency pair and perform further cash management operations.
   • Buybacks are executed using 90% of PL2 to swap tokens via the liquidity contract on the Sushi V2 DEX using Arbitrum One (Ethereum L2).
   • Calculates the RePLENishment Trigger User Reward (RTUR) and distributes PL2 to the trigger user, with the rest going to the Treasury HODL.
2. Second operation: Buyback PL2 and allocation of LP-token
   • Checks if the current fees in PL2 are greater than the threshold for buybacks.
   • If the threshold for the pending fee distribution in PL2 is reached, the buyback of WETH is executed using 5% of PL2 (the remaining 5% being the token amount in PL2 and constituting the total value of the liquidity contract), thus providing additional liquidity for the WETH/PL2 currency pair on the DEX.
   • Receives LP-token and allocates LP-token to the TH.
   • Calculates the RTUR and distributes PL2 to the trigger user, with the rest going to the Treasury HODL.
3. Third operation: Minting
   • Mints the inflation (of which a percentage is used for the RTUR, along with the percentage that comes from the fees collected).
   • Importantly, inflation amounts are not used for burning and buybacks. Newly minted token go exclusively to the Treasury HODL
   • Calculates the RTUR and distributes PL2 to the trigger user, with the rest going to the Treasury HODL.

During these operations, Plenny earns liquidity provider fees. When the Dapp swaps tokens, the fee income (e.g. ≈X%) generated by the Liquidity Provider (i.e. the Dapp) is automatically collected and added to the Dapp's amounts in the liquidity contract on the decentralized exchange and thus included in the rebase mechanism.

This process is a community-driven triggered event occurring periodically. Users triggering the fee allocation are rewarded for executing the smart contract. These events do not occur with each transaction. It is done through bundled transactions to achieve cash flow and gas cost optimizations.

Each time the RePLENishment Trigger is applied, proportional amounts of token enter or exit, taking into account the transaction activity and token income. Characteristically for Plenny, a significant proportion of the underlying activity comes from Lightning Nodes offering services over the capacity market or participate in the DON. In this way, the token economy controls the value ratios between the activities associated with the LN-based non-financial digital economy and the activities related to the Ethereum-based decentralized financial economy, with the aim that the different ratios of the economies are proportionally balanced over time and complement each other for mutual benefit.