Token Pricing & Valuation Framework (Permissionless)

Overview: The Bootstrap Price¶

To abstract the complexity of the underlying real-world assets (RWAs), the protocol utilizes a Bootstrap Price to serve as the initial bid or ask price for the token.

It is important to note that this calculated price is an indicative starting point designed to bootstrap price discovery. It should not be considered the final or absolute fair market value (FMV) of the asset. Rather, it serves as a baseline that will be continuously refined through live market dynamics and trading activities.

Note that the instantaneous liquidity framework is only applicable to distributed assets (permissionless).

Core Valuation Methodology¶

The current value of the token is jointly anchored by two components: the on-chain reserve pool and the off-chain underlying assets. Because the protocol operates across both environments, the token’s price cannot be determined solely by off-chain NAV (Net Asset Value).

The fundamental token price is calculated as the total protocol NAV divided by the circulating token supply:

Price_{token} = \frac{Value_{onchain} + Value_{offchain}}{Supply_{token}}

(1)

On-Chain Valuation¶

The on-chain value represents the portion of the reserve pool deployed across decentralized finance (DeFi) protocols. It is calculated as follows:

Value_{onchain} + ( Shares_{protocol} * Price_{protocol} ) + Extra_{protocol}

(2)

$Shares_{protocol}$ : The proportion of the reserve pool staked in third-party DeFi protocols.
$Price_{protocol}$ : The real-time token price provided by the third-party protocol or oracle.
$Extra_{protocol}$ : Optional additional yield (e.g., reward or governance tokens distributed on top of the base staking yield).

Off-Chain Valuation (RWA)¶

The off-chain value is derived from the estimated net value of the RWAs and any capital currently in transit.

Value_{offchain} = Rwa_{estimated} + Rwa_{pending}

(3)

$Rwa_{pending}$ : Unprocessed RWA subscriptions (funds withdrawn from the on-chain environment by the administrator that have not yet been allocated to the actual RWA).
$Rwa_{estimated}$ : The accrued value of the underlying assets.

Daily Accrual & Calibration¶

To avoid the operational overhead of updating the off-chain RWA value daily, the protocol calibrates the exact net value once a month. Between these monthly calibrations, the estimated RWA value accrues dynamically based on the expected Annual Percentage Yield (APY) of the underlying asset.

First, we derive the daily return rate r:

r = (1 + APY) ^{\frac{r}{365}} - 1

(4)

(Note: For an APY range of 7% to 14.4%, the daily return rate rr falls between 0.0185% and 0.0369%.)

We then calculate the estimated RWA value after tt days using compound interest:

RWA_{estimated} = Rwa_{value} * (1 + r)^t = Rwa_{value} * (1 + APY)^{\frac{t}{365}}

(5)

Special Cases: Queued Withdrawals¶

For funds undergoing a 3-month withdrawal queue, the off-chain RWA net value is updated during the repayment period when the underlying assets are liquidated and the corresponding tokens are burned. At this settlement stage, the new RWA net value is calculated as:

Rwa_{newvalue} = Rwa_{oldvalue} * (1 + APY)^{\frac{t}{365}} - value_{repayment}

(6)

Furthermore, because all user funds originate on-chain, the actual share of the off-chain fund that must be liquidated to satisfy a queued redemption is weighted against the total protocol value. The required fund share is calculated as:

Fund_{share} = \frac{Token_{share}}{Token_{supply}} * \frac{Value_{onchain} + Value_{offchain}}{Value_{offchain}}

(7)

Limitations & Risk Disclosures¶

Important Note: The equations above are utilized strictly to generate a trial price for bootstrapping liquidity. Users and integrators must be aware of the following algorithmic limitations, which the protocol will actively monitor and refine.

Monotonic Price Action & Liquidation Risks:
The bootstrap algorithm inherently produces a smooth, continuously upward-trending price. Without market intervention, this asset would theoretically never trigger liquidations in secondary lending markets, regardless of broader macroeconomic conditions. This will be addressed either through natural market arbitrage adjusting the price, or by introducing a stochastic (random) element to the bootstrap algorithm in future iterations.
Stale Data & NAV Lag:
Traditional RWA NAVs may experience a reporting lag of several weeks following a deposit or redemption event. Consequently, the bootstrap price may temporarily deviate from the true fair market value (FMV) of the underlying assets.
Liquidity Pool Exhaustion:
Because AXC utilizes the bootstrap price for initial trades, significant deviations between the trial price and the actual market value of the underlying assets could result in arbitrage opportunities that rapidly exhaust the instantaneous liquidity pool. We continuously monitor market conditions and reserve the right to revise the bootstrap pricing parameters to protect protocol health.