ELPP Tokens

What ELPP Tokens Represent

ELPP tokens function like shares in an investment fund:

• Each token represents a proportional claim on the pool's assets.

• The token's value increases as the pool generates profits.

• Tokens can be transferred between wallets (with some restrictions).

• When you withdraw, you exchange tokens back for assets.

Key Idea: As the broker generates profits, these earnings increase the total asset value of the pool, automatically boosting the share price. Conversely, losses decrease the total asset value and, hence, the share price.

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How Your Investment Grows

The beauty of the ELPP system is that your investment can grow without you receiving additional tokens. Instead, each token you hold becomes more valuable as the pool generates profits—just like shares in a successful company become more valuable over time.

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ELPP Price Calculation

The value of each ELPP token is calculated using this formula:

$$\text{Share Price} = \frac{\text{Total Asset Value}}{\text{Total ELPP Supply}}$$

Where:

• Total Asset Value: Total value of all assets in the pool.

• Total ELPP Supply: Total number of ELPP tokens issued to liquidity providers.

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How Profits Affect Share Price

Broker Profits Increase Total Asset Value: When the broker generates profits, these profits are added to the pool’s total assets. Example: If the pool starts with $10,000$ USD and the broker generates $100 USD in profit:

$$\text{New Total Asset Value} = 10,\!000 + 100 = 10,\!100 \ \text{USD}$$

Share Price Adjustment: Assuming the total supply of LP tokens remains constant (e.g., 10,000 tokens):

$$\text{New Share Price} = \frac{10,\!100}{10,\!000} = 1.01 \ \text{USD per token}$$

This means each token now represents a greater amount of underlying assets.

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Impact on Deposits and Withdrawals

Deposits: When you deposit funds, the number of LP tokens you receive is determined by the current share price:

$$\text{ELPP Tokens Received} = \frac{\text{Deposit Amount}}{\text{Current Share Price}}$$

Example: If the share price is $1.01$ USD per token and you deposit $1,000 USD:

$$\text{ELPP Tokens Received} = \frac{1,\!000}{1.01} \approx 990 \ \text{tokens}$$

Withdrawals When you withdraw, your ELPP tokens are redeemed for underlying assets at the current share price:

$$\text{Assets Returned} = \text{ELPP Tokens Withdrawn} \times \text{Current Share Price}$$

Example: Withdrawing $1,!000$ tokens at a share price of $1.01 USD:

$$\text{Assets Returned} = 1,\!000 \times 1.01 = 1,\!010 \ \text{USD}$$

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Summary

Summary:

• Unified Mechanism: Both the profit distribution mechanism (PNL) and the token mechanics work together. When the broker earns profit, the total asset value increases, which in turn increases the share price because the total token supply remains unchanged.

• Deposits and Withdrawals: The share price, which is driven by PNL, is the basis for calculating how many tokens you receive upon deposit and the amount of assets you get upon withdrawal.

• Automatic Adjustments: There is no need for manual claiming or harvesting—profits are automatically reinvested, leading to compounding returns reflected in the rising share price.

$$\boxed{\text{Your gains/losses are proportional to the pool’s performance.}}$$

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