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Aliquo introduces a flywheel mechanism that makes the protocol collect 100% of earnings from royalties over secondary sales of AQ1 to become employed to back the floor price of the NFTs themselves. This creates Aliquo’s flywheel — the protocol’s core mechanism.
- 1.The higher trading volume of AQ1 leads to higher earnings from royalties over secondary sales;
- 2.The higher earnings from royalties over secondary sales lead to a higher AQ1 Vault’s balance sheet;
- 3.The higher vault's balance sheet leads to a higher underlying value of the 0,1% stake in the vault backing the floor price of AQ1t;
- 4.The higher backed floor price of AQ1 leads, proportionally, higher earnings from royalties in each trade of AQ1 on the secondary market;
- 5.The circle is completed and repeated in a perpetual loop.
Through a flywheel mechanism, Aliquo automatically adds the profit earned from royalties of the entire token supply of AQ1 to the principal amount of the 1,000 NFTs; reinvesting the entire sum to accelerate the profit-earning process of all assets equally in the next cycle of compounding. Therefore, the current original principal of each AQ1 (i.e., current backed floor price) represents the accrual of all the interest earned and added from the previous cycles of compounding.
Aliquo’s flywheel provides a long-term, virtuous cycle of compounding the backed floor price of AQ1: as much more AQ1 becomes traded, more earnings from royalties the protocol accumulates as backed value to AQ1 itself. Hereupon, the key point of compounding the floor price of AQ1 is that as much more the backed floor price increases, it proportionally leverages how much 10% from royalties equals in each secondary sale of AQ1; then, reflecting on the posterior protocol revenue and the next cycle of compounding.
It’s correct to assume that each secondary sale of AQ1 affects the entire token supply, meaning that the interest earned from royalties in each secondary sale is diluted among the entire token supply of AQ1 (interest earned per secondary sale/1,000), not accruing the sum earned to the traded token. In other words, one secondary sale of AQ1 earns interest on the entire token supply.
Aliquo’s flywheel works as a structurally viable and economically sustainable mechanism that makes AQ1 accrue its liquidity as collateralized value, providing a long-term, virtuous cycle of compounding the backed floor price of the token itself.
- 1.When the trading volume of AQ1 increases, earnings from royalties over secondary sales increase as well;
- 2.When earnings from royalties over secondary sales increase, the allocation for AQ1 Vault increases as well;
- 3.When allocation for AQ1 Vault increases, the backed floor price of AQ1 increases as well;
- 4.When the backed floor price of AQ1 increases, earnings from royalties over secondary sales in each secondary sale of AQ1 proportionally increase as well.