How it works¶
A strategy holds ETH, buys the floor with it, relists what it buys, and burns its own token with what that sells for. Each step, and what keeps it honest.
This page follows an NFT strategy. A token strategy runs the same loop with bags of a token in place of pieces, and a reflexive strategy has no shelf at all. Each has its own page: NFT strategy, Token strategy, Reflexive strategy.
Two phases¶
A strategy lives in two markets, one after the other.
First, its curve. At launch the whole supply goes onto the strategy's own bonding curve. Trades there pay 3%: 2% royalty and 1% to Sweep. There is no treasury yet, and the machine on this page does not run.
Then, its pool. When buyers have put 4.2 ETH into the curve, the strategy graduates: its Uniswap v4 pool opens at the price the curve closed at, and the machine starts. Most launches never get there, and never sweep. The curve explains this first phase; everything below is what happens after graduation.
The treasury¶
Every trade in the pool pays a 10% fee, and 8 of those 10 points go to the strategy as ETH. That ETH is the treasury. It is not lent, staked or moved anywhere else: it waits to buy the floor.
A treasury fed by fees grows when the token trades, which is exactly when a collection most wants a bid under it. Nothing has to be topped up by hand.
The bid¶
The machine cannot see a marketplace listing, so it does not try to price one. It publishes a bid and raises it every second since its last purchase, until a seller takes it.
The bid is always the smallest of 3 numbers:
- how far it has climbed since the last purchase
- the ceiling set for the strategy
- what the treasury holds
So the machine never offers more than it has, and never more than its ceiling. The climb starts from zero when the pool opens, and again after each purchase.
At launch the climb is set between about 0.0036 ETH and 36 ETH an hour. Too slow and the bid never reaches a floor price; too fast and it passes the floor before a seller can react.
The purchase¶
Anyone who finds a piece listed at or under the bid can have the machine buy it. They point the machine at the listing, the machine pays, and then it checks two things: that one more piece arrived, and that it is the piece that was paid for. If either check fails, the whole purchase is undone.
The machine never buys from the collection contract itself, only from sellers. That keeps a collection from minting fresh pieces and selling them to its own strategy at the bid.
The shelf¶
A piece goes on the shelf the moment it is bought, at 1.2 times what the machine paid. Anyone can buy it at that exact price.
Sweep can change the markup for a strategy, and a change moves every piece on the shelf at once. The shelf price never goes below what the machine paid, so a sale is never a loss for the treasury, only a smaller gain.
The burn¶
What a piece sells for never returns to the treasury. It waits in a separate queue for the burn, so sales cannot quietly turn the machine into a fund.
The queue drains in passes. Each pass spends a capped amount on buying the token on its own pool, and sends what it buys to the dead address. Passes are spaced apart, so a large sale reaches the pool as steady buying rather than one order that a bot trades around.
Whoever runs a pass keeps 0.5% of it. A burn helps every holder a little and nobody in particular, so the reward is what makes a stranger run it.
Then again¶
Fees keep arriving, the bid climbs again, and the loop repeats for as long as the token trades. There is no end state and no further migration: the pool a strategy graduates into is the pool it trades on for good.
When it goes quiet¶
The floor falls under the shelf price. Pieces stay on the shelf and nothing burns while they wait. Sweep can lower the markup so they sell again.
Nobody runs a step. Every step is open to anyone, and the burn pays. Sweep's keeper runs them too. If everyone stops, fees simply wait in the treasury.
The collection stops trading. The machine keeps bidding with whatever its token earns. It cannot create demand for a collection nobody wants.