Token price logic

The token price is adjusted when specific events happen:

• New loan initiated
• Monthly payment is made
• Loan default

When a new loan is initiated, the loaned amount of cryptocurrency is booked as 'deployed capital', and as re-payments are made every month, this amount decreases. This concept is very much in line with accounting standards found in the traditional asset management business.

On every repayment, the deployed capital portion is reduced by the repayment principal amount, and the interest portion is booked into the 'undeployed capital' line. Undeployed capital is the idle cryptocurrency, ready to deploy for a new NFT loan.

In the event of a loan default, the deployed capital is marked to zero. The defaulted NFT is moved into the Vault, and is marked at the current appraisal value.

The end result for the token price is thus:
( Deployed capital + Undeployed capital + Defaulted NFT value ) / Token supply = Token Price

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Good to know

One way to think of the token price is as a net asset value (NAV) of the Vault. It is calculated by adding the cash balance, loans owed, and cumulative marked values of defaulted NFTs within the Vault.