Buybacks and Provide Liquidity

Within the treasury’s toolkit, Buybacks and Providing Liquidity are two strategic interventions executed under specific conditions determined by AI agents. Both actions are designed to uphold MID’s at-least-$1 baseline and, when possible, enhance its value position, all while ensuring that any newly introduced MID is never inflationary without backing.

Buybacks

When to Trigger: If MID’s market price dips below $1, it indicates that supply may be outpacing demand or short-term selling pressure is high. AI agents, continuously monitoring price deviations, may decide it’s beneficial to use treasury-held stable assets to buy MID back from the market.
Effect on Price and Value: By conducting a buyback, the protocol reduces MID’s circulating supply, relieving downward pressure and nudging the price back toward or above the $1 baseline. Since every MID is at least $1 backed, removing some from the market tightens supply and reasserts the intrinsic value proposition.
Data-Driven Execution: AI agents determine the size and timing of buybacks, ensuring they are proportionate to the price gap and treasury liquidity. This prevents over-commitment of treasury resources and maintains long-term viability.

Result: Buybacks serve as a corrective measure, swiftly aligning the price with fundamental value. Users gain confidence knowing that if MID ever strays below $1, the protocol can and will restore equilibrium through a reasoned, data-backed intervention.

Providing Liquidity

Deepening Market Liquidity: To minimize price slippage and ensure a healthy trading environment, the treasury can supply MID and stable assets (like DAI) to liquidity pools on decentralized exchanges (DEXs). This increases the depth of the order book, reducing volatility and making MID more appealing for traders.
Earning Fees, Not Undermining the Baseline: By participating as a liquidity provider, the treasury earns a portion of the trading fees generated by the pool. These fee revenues further strengthen the treasury, indirectly supporting staking rewards and other operations. Crucially, since every MID introduced is fully backed (and often premium-enhanced), providing liquidity does not risk pushing MID below $1.
Why MID in LP is Not a Problem: When the treasury places MID into a liquidity pool, those MID tokens are effectively taken out of circulation. They are locked in the pool, paired with stable assets, and not accessible to the market unless the treasury decides to remove them. This ensures that these MID tokens do not contribute to inflationary pressure or dilute the $1 baseline. Instead, they operate like a “reserve” within the LP position. Because MID is always minted at or above $1 worth of backing, its presence in the LP cannot inherently drop below this threshold.
LP Provision as Indirect Conversion Route: By supplying liquidity (MID paired with stable assets) to DEX pools, the treasury ensures a ready and liquid market. Users who hold MID and seek to return to stable assets can do so through these markets, selling MID into stablecoins via the liquidity pools. Thus, providing liquidity indirectly offers users the flexibility they would have if a direct redemption mechanism existed.

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Buybacks and Provide Liquidity

Buybacks

When to Trigger: If MID’s market price dips below $1, it indicates that supply may be outpacing demand or short-term selling pressure is high. AI agents, continuously monitoring price deviations, may decide it’s beneficial to use treasury-held stable assets to buy MID back from the market.
Effect on Price and Value: By conducting a buyback, the protocol reduces MID’s circulating supply, relieving downward pressure and nudging the price back toward or above the $1 baseline. Since every MID is at least $1 backed, removing some from the market tightens supply and reasserts the intrinsic value proposition.
Data-Driven Execution: AI agents determine the size and timing of buybacks, ensuring they are proportionate to the price gap and treasury liquidity. This prevents over-commitment of treasury resources and maintains long-term viability.

Providing Liquidity

Deepening Market Liquidity: To minimize price slippage and ensure a healthy trading environment, the treasury can supply MID and stable assets (like DAI) to liquidity pools on decentralized exchanges (DEXs). This increases the depth of the order book, reducing volatility and making MID more appealing for traders.
Earning Fees, Not Undermining the Baseline: By participating as a liquidity provider, the treasury earns a portion of the trading fees generated by the pool. These fee revenues further strengthen the treasury, indirectly supporting staking rewards and other operations. Crucially, since every MID introduced is fully backed (and often premium-enhanced), providing liquidity does not risk pushing MID below $1.
Why MID in LP is Not a Problem: When the treasury places MID into a liquidity pool, those MID tokens are effectively taken out of circulation. They are locked in the pool, paired with stable assets, and not accessible to the market unless the treasury decides to remove them. This ensures that these MID tokens do not contribute to inflationary pressure or dilute the $1 baseline. Instead, they operate like a “reserve” within the LP position. Because MID is always minted at or above $1 worth of backing, its presence in the LP cannot inherently drop below this threshold.
LP Provision as Indirect Conversion Route: By supplying liquidity (MID paired with stable assets) to DEX pools, the treasury ensures a ready and liquid market. Users who hold MID and seek to return to stable assets can do so through these markets, selling MID into stablecoins via the liquidity pools. Thus, providing liquidity indirectly offers users the flexibility they would have if a direct redemption mechanism existed.

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Last updated 3 months ago