C-Tokens
The first over-collateralized digital commodities offering yield-earning potential
Last updated
The first over-collateralized digital commodities offering yield-earning potential
Last updated
Collective Finance has developed a unique token concept, the “C-Token”, which is a tokenized, asset-backed, and commodity representation. All C-Tokens will operate similarly and will be backed and over-collateralized by real on-chain assets. The will always keep approximately 10% of the circulating C-Token supply to bolster C-Token liquidity availability during instances of high demand. As the sole entity capable of minting new C-Tokens, the Collective Finance Vault will back, over-collateralize, and mint new C-Tokens based on hard asset availability and market demand. This may be done in the future with new C-Tokens and a capital raise. The on its part may hold various C-Tokens within its position as a yield and reward-earning asset.
For all C-Tokens, their corresponding collateral assets will be held by the Collective Finance . All C-Tokens will be over-collateralized at a rate of 101-110% which can be checked at all times through our dApp, contracts, and . The over-collateralization percentage will slowly grow over time as a small portion of the mint/redeem (below) fees will be used to add to the collateral pool. Currently, the process is handled manually though eventually, we plan to have everything fully decentralized and under control.
There is the ability for users to Mint & Redeem all of our C-Tokens through our dApp. This allows users to acquire tokens at any amount they please without having to face the price impact of the . The initial Mint & Redeem Fee will be 2%. However, this fee % is fluid in nature and will likely decrease over time based on volume, liquidity, and arbitrage. Our Mint/Redeem option offers an additional entry and exit point for our C-Tokens, outside of traditional liquidity pools. This feature also helps increase potential profitability on arbitrage opportunities as holders of Collective Finance will receive a discount on the Mint/Redeem fee.
Mint & Redeem Fee = 2%
The first C-Token to be put into circulation will be CGLD, a fully backed gold token valued at 1 gram of gold. Each CGLD token is 100% backed by PAXG sitting in our Vault. CGLD will be provided with a floor price (1 troy gram of gold) which is collateralized, but will not be priced fixed (hard-pegged) and thus can experience price fluctuation based on liquidity, demand etc. Collective Finance will maintain the goal of keeping the CGLD as close to the floor price (1 gram of gold), with the understanding that should the price of CGLD fall below the floor price, it will be trading at a discount to its Net Asset Value (the PAXG collateral held in the ). Likewise, the value of CGLD could also rise above the floor price, based on demand and yield earning potential. We feel this unique opportunity will provide participants with the chance to not only gain yield-earning exposure to gold but also the chance to get this exposure with price upside while at the same time maintaining a known floor value based on the . As described above in the Mint/Redeem section, this non-fixed price, in combination with our Mint/Redeem feature, creates a positive environment for ongoing arbitrage opportunities.
If you would like to learn more about PAXG and Paxos .
There will be many more C-Tokens that Collective Finance plans to launch, the next most likely being Silver and/or Diamonds. Future C-Tokens will function in the exact same nature as described above, including the specific collateral. Each C-Token will have its own corresponding collection sale which will help to raise the capital needed for the backing, , and creation of additional liquidity pools and pairs.