The interesting use cases of the CTPSB token
I launched the CTPSB project in September 2020. The idea was to create a community account for the CTP tribe to support the development of the members. During the first month, the community could contribute to this project and at the end of the month they would get 1 CTPSB token for every Hive that they contributed.
How does CTPSB work
There is the @ctpsb account and there is the CTPSB token on hive-engine. The account and it's Hive Power is the underlying asset for the token. The value of each token is defined by the Hive Power on the account divided by the number of tokens in circulation.
The @ctpsb account is using it's hive power to support active members of the CTP community who create quality content. The account also creates posts and organises challenges on a regular basis. The generated author and curation rewards, together with the organic growth of the hive power, allow the account to grow in over time.
At the end of September 2020, there were 6000 Hive Power on the account. Today there are 23'000.
Price evolution of CTPSB, source: tribaldex.com
New tokens can only be created or burnt if the according amount of hive power is either added or powered down. This means that the creation/deletion of new tokens doesn't effect the token value. In other words, the Hive value of the CTPSB token can only go up. Also, every token in circulation is backed by real hive power that can be traced on the blockchain.
Faster growth thanks to leverage effect
The CTPSB token evolves in a linear way with the growth of the underlying hive account. There is however a leverage effect in place that allows the token to grow faster than a normal hive account. People can delegate to the @ctpsb account and get weekly dividends in the form of CTP tokens. These dividends are financed by the tribe curation rewards. Thanks to these delegations, the account grows at the speed of it's own hive power together with the delegated hive power, which is around 16'000 Hive at the moment.
Thanks to this leverage effect, the account grows at a rate of around 20% APR.
Very useful way to use the CTPSB token
When you compare the CTPSB token with other tokens like Index, Bro, Income or Dhedge, the big difference is that it doesn't distribute dividends to it's holders. All the income is reinvested into the token and is mirrored through the token value. In financial terms, the CTPSB token would be the equivalent of an income accumulating growth fund.
For the my other project Liotes, that I run with @ph1102, we have realized that the characteristics of this token can actually offer a great usefulness. For our Diesel Pool LEN:LENM, we have created a reward pool. The problem with these reward pools is that you add some rewards when you start it. However, the more liquidity is added, the lower the APR for liquidity providers becomes. Ideally, we would like to have a similar APR over time, even if more people add liquidity to the pool. We solved this problem by putting CTPSB tokens as rewards in this pool. Thanks to that, our reward pool grows at a rate of around 20% APR. If the liquidity grows at a lower rate than that, the APR in for liquidity providers is actually growing over time!
In addition to that, we also realized that people love to get tokens as rewards that have a stable value and grow over time.
CTPSB is a perfect token to add as rewards in liquidity pools.
On another level, for the same project, we use CTPSB tokens when we want to accumulate liquidity. Instead of just keeping swap.hive tokens, we buy CTPSB and we get 20% APR on our liquidity.
For limited amounts only
What has to be said, is that this later use case is working great for limited amounts only, because the liquidity on the market is limited. There is a market maker that retraces the value of the token and sets new buy orders on a regular basis. If many people want to sell their CTPSB tokens at the same time, power downs are necessary to provide this liquidity and it can take some time. Therefore, I wouldn't suggest to buy hundreds of tokens to store liquidity.
I believe that thanks to its non common structure, the CTPSB token is actually a very useful tool for people who want to build stuff on Hive.
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