What is $LOVE?
Hi Caretaker fam! Today we’re talking about what makes My Revenge Cat tick: The $LOVE Token.
While most projects have an inflationary token given to yield farmers that always grinds down lower and lower in price, the goal with $LOVE is to do something different. $LOVE was created to appreciate over time, rewarding those that want to play a longer game.
At first, $LOVE may seem like a silly gimmick that a digital cat gives you for being vigilant with his needs, but let’s dive in a little bit deeper. What makes $LOVE so special is something called synthetic derivatives.
The term “Synthetic Derivative” refers to derivatives emulating their underlying asset(which could be a stock, a commodity, an index e.t.c.), but at the same time changing essential characteristics like the methodology of its price calculation.
In all practical ways, $LOVE is a synthetic derivative of both BNB and $CAKE. Why is that? The key is the end of the above definition: $LOVE changes the methodology of price calculation for both assets. This might sound a bit complicated, so let’s consider some situations outlined below.
When you obtain $LOVE, you pay a fixed, static price of 0.015 BNB per 1 $LOVE token. Because $LOVE can be redeemed for varying quantities BNB and $CAKE, it’s possible, and very likely, that the expected value of $LOVE is greater than 0.015 BNB. $LOVE’s price calculation is not simply 1 $LOVE = 0.015 BNB. This is a departure from many tokens and instruments you may traditionally be familiar with, such as $WINGS, $BANANA, $CAKE etc that all rely on a liquidity pool to determine value.
The expected value (EV) is an anticipated value for an investment at some point in the future.
The price of $LOVE varies depending upon parts of a larger system. This includes both the human participants, and the system’s parameters. For example: If the $CAKE vault’s farming yields appreciate to a USD value of $10.00, but 0.015 BNB is currently worth $6, any $LOVE in the system is temporarily worth $10.00. This is why patient caretakers can assume a positive expected value over a period of time by interacting with the game.
Another interesting consideration is that BNB wrapped in $LOVE now has both BNB and $CAKE exposure. While these assets typically trade very closely, there is a non-zero chance that they may diverge at some point. Because $LOVE can be redeemed for either one, it increases the financial flexibility of the $LOVE asset over time. Should BNB skyrocket, leaving $CAKE in the dust, one could simply redeem their $LOVE for BNB over time.
If you’re bullish on these assets, $LOVE also represents a financial position in the interest of price appreciation for both $CAKE and BNB. If the price of $CAKE doubles, your $LOVE tokens simply redeem for double the USD amount from the interest of the $CAKE vault. However, if one wishes to “cash out” their $LOVE for the USD dollar amount which they entered, they can claim the $CAKE interest early, and have more flexibility over their gains on their initial BNB to $LOVE conversion.
This struggle between short term and long term expected value drives the My Revenge Cat experience. While taking care the internet’s best cat, you’re rewarded with a very interesting investment tool that allows you to interact with other players and write the narrative for all participants in real time.
The true beauty of $LOVE is giving up immediate “pump and dump” expectations for a slow, longer term grind to positive expected value. This was a core motivating factor for the creation of the game. It’s a much more responsible, safe, and entertaining approach to appreciation of your investment. What you give up in instant gratification, you make up for in sound asset exposure and appreciating game mechanics.
No matter how you feel about $LOVE, Carl, or My Revenge Cat, we hope you enjoy the community, experience, and interesting thought puzzle that has forever been encoded on the blockchain.
Come join us and become a caretaker!