Minting

Minting EGGS:

• Mechanism: Users can mint EGGS by depositing S into the protocol's smart contract.

• Fee: A 2.5% fee is applied to each minting transaction. Fees are added to the protocol, increasing the S backing per EGGS.

• Supply Cap: Minting stops once 100,000,000,000 EGGS have been minted. After this, new EGGS tokens can no longer be minted and the supply becomes truly deflationary via existing burning mechanisms.

Minting Asset Flow

Redeeming EGGS:

The simplest way to redeem your EGGS for S is to 'sell' back to the contract via the 'swap' tab in the dApp. This incurs the same 2.5% fee as minting, but burns the EGGS and sends the underlying S to the user. Fees are distributed to the contract, LP incentives and team at the same rates as minting.

Alternatively, EGGS can be redeemed by taking a loan against your position and instantly defaulting. This returns the underlying S to the user, minus the collateral premium and interest, and burns the EGGS.

Minting Example:

• Let's say there is 100 EGGS tokens in existence, and there is 100 S tokens backing them on the contract. That means the price of 1 EGGS is 1 S. There is a 2.5% minting fee, so to mint the next EGGS token a user must pay 1.025 S. Of the fee collected, 70% or 0.0175 S, is added to the backing, so there is now 101 EGGS and 101.0175 S. We can calculate the new price of EGGS by doing 101.0175 S / 101 EGGS = 1.0001732673 S/EGGS. The price of every EGGS token has increased! The other 30% of the fee collected, or 0.0075 S, is distributed to LP incentives and the team.

[User Deposits 1.025 S]
         |
         v
+---------------------------+
|  EGGS Token Smart Contract |
+---------------------------+
         |
         |---> Adds to Contract Backing:
         |        - 1.00 S (Base Amount)
         |        - 0.0175 S (70% of Fee)
         |
         |---> Distributes Fees:
         |        - 0.00375 S (15% of fee) to LP Incentives
         |        - 0.00375 S (15% of fee) to Team
         |
         |---> Mints 1 EGGS Token
         v
[User Receives 1 EGGS Token]