DEFI FOR PUBLIC COMPANIES

Decentralized Finance “DeFi” is designed to be globally inclusive. Centralized finance is based around national stock markets that have high barriers to entry. The Abbey DeFi methodology offers companies listed on national stock exchanges exposure to DeFi.

Abbey is a Uniswap based DeFi service provider that allows public companies to offer people a novel way to speculate on the success of their business in a decentralized manner.

The premise is both elegant and simple, the public company commits to a marketing spend equal to 1% of its quarterly sales revenue. And, since it’s a public company, the exact value of this 1% is published in their public accounts, as filed quarterly with a national securities regulator.

Using Abbey as a DeFi marketing agency, the public company spends 1% of its quarterly sales revenue on one side of a bespoke Uniswap trading contract. The other side of the Uniswap trade is the public company’s proprietary token that represents 1% of its future sales revenue.

DeFi traders wishing to speculate on the revenue growth of the public company deposit ETH cryptocurrency in return for “PUBCO-1%” Uniswap tokens. The Uniswap Automated Market Maker ensures DeFi market liquidity and legitimate price discovery. The more ETH that the company deposits over time, the higher the value of the PUBCO-1% token, as held by DeFi speculators.

UNISWAP FOR PUBLIC COMPANIES

Uniswap is an automated liquidity protocol powered by a constant product formula and implemented in a system of non-upgradeable smart contracts on the Ethereum blockchain. It obviates the need for trusted intermediaries, prioritizing decentralization, censorship resistance, and security.

Each Uniswap smart contract, or pair, manages a liquidity pool made up of reserves of two tokens. In the Abbey case, one token reserve is the cryptocurrency ETH, and this is what’s contributed by the public company every quarter. The other token reserve is the public company’s own token, i.e., the PUBCO-1% token as created and operated by Abbey.

To seed the trading process, Abbey is always the first liquidity provider (LP) for the Uniswap pool and deposits ETH 5.0 and 100,000 PUBCO-1% ERC-20 trading tokens. Each company that contracts with Abbey for DeFi marketing services will have 100,000 additional tokens held in the public company’s balance sheet as a treasury asset.

Using the Uniswap Automated-Market-Maker, the PUBCO-1% trading tokens tracks the liquidity-pair and, unlike potential future Uniswap LP’s, the Abbey seed ETH and PUBCO-1% tokens may only be redeemed with a smart-contract-enforced public notice period. Therefore, going forward, every time the public company deposits 1% of its sales revenues to Uniswap, it causes the price of the PUBCO-1% token to increase on Uniswap.

The notice requirement of future LP removal from Uniswap is a key pillar of the Abbey concept as it gives speculators comfort that the liquidity pool for the public company token can ever disappear without prior notice. Note, the methodology to pre-announce the redemption of the seed liquidity is programmed into the PUBCO-1% ERC-20 smart contract, and this contracts source code is publicly available for inspection. So, no “exit scam”!

BUYBACK AND BURN

Uniswap guarantees that every time the public company deposits its 1% worth of ETH to Uniswap it causes the price of the PUBCO-1% token to increase. As per the Uniswap algorithm, depositing ETH to one side of the Uniswap smart contract causes PUBCO-1% tokens to be returned to the depositor. This is how speculators gain exposure to the company’s sales growth.

As an added commitment to speculators, all PUBCO-1% tokens returned to the public company by Uniswap each time it makes a 1% deposit are burned by the Abbey smart contract, thereby continuously reducing the number of PUBCO-1% tokens in circulation. So, not only does the buyback intrinsically increase the value of the PUBCO-1% tokens, the burning of the bought-back tokens also serves to increase the token-value since there are fewer tokens available, i.e., a reverse-dilution event!

PUBLIC COMPANY ASSET

Abbey supplies the initial seed of 100,000 PUBCO-1% tokens as Uniswap liquidity. Abbey also creates another 100,000 tokens for the public company to hold as a liquid asset on its balance sheet, outside of Uniswap.

Every quarter, the company’s CFO may mark-to-market the value of the 100,000 PUBCO-1% tokens based on the current, publicly available price on Uniswap.

DeFi speculators will obviously be concerned with token dilution inside Uniswap. To alleviate these concerns, the Abbey PUBCO-1% contracts are programmed to create (aka mint) only 200,000 tokens, and no more. 100,000 go to the Uniswap liquidity pool along with ETH 5.0 and the other 100,000 are held by the public company in treasury.

To prevent the company from “dumping” it’s 100,000 tokens into Uniswap, thereby removing speculators ETH, the Abbey smart contract forces the company to notify the speculator community of its intent to sell some of its treasury PUBCO-1% tokens, typically 4 months in advance. This “announcement” gives speculators plenty of time to withdraw ETH from Uniswap should they deem such a company sale to not be in their interest.

It should be noted that the 100,000 Uniswap tokens held by company may never be transferred to another wallet, exchange etc. except for the sole destination wallet address representing the Uniswap trading pair. So, again, no “exit scam”!

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