I am trying to sell tokens without spooking the community behind that token
Large holders often face back lash for selling tokens at any point. This conditional agreement helps communities alleviate that issue.
Whether you're a founder, VC, or large holder, your position as a token holder is often attributed to your confidence in the project. Commonly, selling tokens at market is often perceived negatively, without consideration of your predefined price milestones for that position.
Using our conditional agreements, Hedgey allows you to create clear, public agreements to sell tranches of tokens at set price milestones in the future. This forecasted behavior is key in communities seeing your token sales as a product of success rather than retreating support.
Example 1
Example: Justing (representing SwapSafe Capital) sets price milestones for a token in its portfolio. (Cost basis of $.03 USDC per token)
"Contract #1: If you pay me $25,000 USDC today, I give you the right to purchase 500,000 XYZ tokens at $1.7 USDC per token anytime before June 21st 2022."
"Contract #2: If you pay me $45,000 USDC today, I give you the right to purchase 500,000 XYZ tokens at $2.5 USDC per token anytime before December 21st 2023.
When someone purchases either of these agreements, one of 3 things can happen:
1) The token reaches the price milestone in the defined period and the contract buyer exercises. This leads to either a physical execution (sending USDC to your address) or a cash-light close (using flashswaps to send you your USDC and taking the profits.)
2) The token does not reach the price milestone and the contract expires. You maintain your upfront premium as well as unlock your tokens. You can either sell them off market or redeploy them in another contract.
3) The token reaches the price milestone and the buyer does not activate the contract before expiration. In the condition that the buyer chooses not to execute a profitable position, the contract can expire and you will receive your tokens back at expiration along with maintaining your initial premium.
Analysis: In these two examples, Justin is deploying two separate tranches of a single token position. The first contract represents a portion of tokens that are priced to sell at $1.7 USDC. By creating a contract to sell them 6 months in advance, SwapSafe capital is forecasting its sale price for that tranche, while letting other investors participate in it's position and future sale.
If an investor purchases this tranche, they can execute it at anytime at that price, or resell their position to another investor.
To make this possible, the Hedgey protocol takes traditional financial options and repackages them for specific DeFi Needs. In this case, we use Call Options. If you want to know what's under the hood at Hedgey, get started here.
If you want to write your own conditional agreement, click the box below.
Last modified 2mo ago
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