🪄Mechanism
How does it work
🌤️ Abstract
Boomerang introduces an innovative concept in the crypto world, combining a cryptocurrency coin, smart contracts, Safety Nets, a Bank, and a liquidity pool (Sushi Swap). It employs half minting, custody, and a buyback-and-burn strategy. For the first time, it offers crypto investors a way to reduce their investment risks significantly.
👉 Key points
Boomerang operates on several foundational principles:
Your coins are stored in your regular wallet, over which you have full ownership.
Of a purchase, 50% of the funds is used to purchase in the LP. The other 50% is minted. This creates some inflation.
Of a purchase, 50% of the funds is locked in a vault (contract) as a Safety Net.
A Safety Net to shield investors from abrupt price declines, accessible when the coin's value drops to half its original price.
A Safety Net's locked funds can be claimed when the coin's value decreases to 50% of its original price.
This Safety Net ceases to exist when the coin's value climbs to 125% of its original price.
The Bank boosts the coin's value by buyback-and-burn with the funds from expired Safety Nets. This creates deflation.
BMR uniquely balances inflation and deflation, influenced by each purchase and the Bank's activities.
The Bank strategically reinvests its profits in marketing initiatives and attracts new buyers to increase demand.
🎬 Key scenarios
There are five main scenarios to consider:
Buying:
Half of your money buys half the coins on the market (via Sushi Swap).
The other half is held in a lock (contract) for the Safety Net.
The remaining half of the coins is then minted (created).
Price Increase Above 125%:
The Safety Net expires, and the locked funds are transferred to the Bank.
Price Drops Below 50%:
You can trade the coins for their market value and claim the Safety Net.
Selling Your Coins:
The Safety Net expires, and the locked funds go to the Bank.
Significant Price Drop:
The Bank uses reserves from expired Safety Nets to purchase and burn coins on the market, creating deflation.
While this might seem complex initially, the concept becomes clearer with real-world examples, which you'll find in the Examples chapter.
⚖️ Inflation & deflation
In the Boomerang ecosystem, inflation and deflation are key concepts that help maintain the coin's value and stability. Here's how they work:
Inflation mechanism:
Occurs with each purchase of Boomerang coins. Only the half of your purchase is minted. The other half is bought from the market on SushiSwap.
As more coins are bought, the total number of coins in circulation increases, leading to inflation.
This increase in coin supply can slightly lower the value of each coin, similar to how printing more money can decrease a currency's value.
The risk of lower evaluation is compensated with the Safety Nets.
Deflation mechanism:
Driven by the Bank's buyback-and-burn strategy.
The Bank uses funds from expired Safety Nets to buy back Boomerang coins from the market on SushiSwap.
These bought-back coins are then burned (permanently destroyed).
By reducing the total number of coins in circulation, this process creates deflation.
Deflation can increase the value of each remaining coin, as the reduced supply can make each coin more valuable.
These inflation and deflation mechanisms in Boomerang work together to balance the coin's ecosystem, ensuring long-term stability and value for investors.
🙋♂️ How to use?
Though the mechanism might sound intricate, it's quite straightforward in practice. The website provides guidance for buying and selling coins and managing your Safety Nets effectively.
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