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How it works?

PreviousDeFAI-Index AI AgentNextToken Utility/Mechanism

Last updated 3 months ago

  1. Index Curation: The AI Agent selects tokens based on market capitalization, performance metrics, and growth potential.

  2. Index Calculation: The relative weight of each token in the index is determined by its market cap, creating a balanced and diversified portfolio.

  3. Dynamic Management: Users can buy into or trade out of the pool at any time, with the system automatically calculating the index value and minting or burning tokens accordingly.

NOTE: AI Accuracy: AI Agents achieve 3.5x better accuracy in investment predictions compared to traditional human strategies.

  1. Token Selection

  • Select Top 10 AI Cryptos based on market capitalization or performance.

  1. Index Value Calculation

  • Calculate the market cap-weighted average price of the selected tokens:

  • Index Price = (Σ (Market Cap of Token_i × Price of Token_i)) / (Σ Market Cap of Token_i)

  • Here, the Market Cap of Token is used to determine its relative weight in the index.

  1. Minting and Burning

  • Minting: When a user buys the index token, assets are purchased from the market, and new index tokens are minted. New Supply = Existing Supply + (Investment / Index Price)

  • Burning: When a user sells the index token, assets are sold, and the equivalent number of tokens are burned. New Supply = Existing Supply - Tokens Sold

  1. User Interaction

  • Buy: Users invest in the index, gaining exposure to all 10 tokens through one asset.

  • Sell: Users sell their index tokens, which triggers the burn mechanism and releases the equivalent value in underlying assets.

Example Calculation

  • Top 10 Tokens: Token A, Token B, ..., Token J.

  • Token Prices: $10, $20, $30, ..., $100.

  • Market Caps: $1B, $2B, $3B, ..., $10B.

Index Price = [(1B × 10) + (2B × 20) + ... + (10B × 100)] / [1B + 2B + ... + 10B] Index Price = (10B + 40B + 90B + ... + 1000B) / 55B = 65

  • When a user buys $130 worth of the index:

  • Assets worth $130 are added to the pool.

Minting occurs: Tokens Minted = Investment / Index Price = 130 / 65 = 2 tokens

When a user sells 2 index tokens:

  • Assets worth $130 are removed from the pool.

  • Burning occurs: Tokens Burned=2 tokens