Last updated
Last updated
In the CATapult model, during the Fixed Price Phase (the first 30 minutes), a set portion of the token supply is available for purchase at a fixed price. This allows contributors to buy the token at the same rate, ensuring fairness. However, when the phase concludes, the non-sold tokens from the initial available supply are burned.
The reasoning behind burning the unsold tokens is twofold:
Market Scarcity: By burning the unsold tokens, we reduce the total supply, which ensures that there is no oversupply of the token when it transitions into the Discovery Price Phase. This helps create scarcity, which is an important aspect of maintaining the token's value in the open market.
Protecting Traders: If these unsold tokens were not burned, they could be dumped into the market once the token hits the secondary market (Discovery Price Phase), potentially leading to a sharp drop in price. Burning the unsold tokens mitigates the risk of such a scenario, ensuring that the price remains more stable and the contributors' investments are protected.
In CATapult, the amount raised during the Fixed Price Phase directly correlates with the amount of tokens that are available for sale. The greater the amount raised, the more supply is released during the fixed price phase. However, if a token fails to sell all the available supply during this phase, the unsold tokens are burned.
The following diagram illustrates how the supply decreases in a degressive manner depending on the amount raised in the Fixed Price Phase.
If the full Hard Cap (e.g., 80 SOL) is raised: No tokens are burned. The full 80% supply is sold, and the 20% that was locked for the Raydium launch is released. If less than the Hard Cap is raised: A portion of the unsold tokens from the initial 80% supply will be burned. The less raised, the higher the percentage of the unsold tokens that are burned.
A token must sell at least 25% of its total supply (25 SOL) before the FPP ends to be eligible for migration.
By controlling the number of tokens burned and the total amount raised, CATapult ensures a fair and dynamic market cap for every token launch.
