The Marketplace Reset
As the market price of Straato increases, per the mechanisms of the offer queue, demand for Straato will inevitably decrease. Similarly, if users stop selling Straato, supply will diminish.When demand or supply drops below a predefined threshold, the Straato Marketplace undergoes a “Reset”. No asset can go up forever!
The Reset allows the Marketplace to function in perpetuity, so that some users are not stuck with illiquid Straato and others are trapped out of the economy. This makes Straato a “cyclical” marketplace, divided into periods between Resets called “cycles”. Importantly, once the Straato Marketplace undergoes a Reset, the following actions occur immediately.
- The “offer queue” is immediately wiped and all pending offers are deleted.
- The Straato Marketplace is placed into “pause” mode for at least 1 hour, during which no marketplace operations may occur.
- All users that owned Straato when the Reset occurred will forfeit a percentage (specified in the Market Statistics and Parameters panel of the Dashboard) of those assets. Those assets will be inherited by the market maker and will be used to regulate the Marketplace economy in future cycles. After the 1-hour delay in pause mode, we will begin the next “normal” or “selloff” mode cycle. Trading of Straato assets will then begin again from a minimum price floor of $1.
We understand that the Reset can be concerning. But don’t worry! - you will have the opportunity to recoup your losses in future cycles with the majority of assets that you retain as an owner.
From a technical standpoint, a Reset can be triggered in the economy in three different ways: 1) the Reset ratio exceeds the upper bound, signaling a lack of adequate supply in the market, 2) the Reset ratio decreases below a lower bound, signaling a lack of adequate demand in the market, or 3) the number of transactions in the previous hour failed to surpass a minimum threshold. Resets are evaluated each hour, on the hour (i.e. 12:00, 1:00, 2:00, etc.). Calculating the number of transactions is trivial, but we do use two different minimum thresholds for night and day, both of which can be viewed in the dashboard. We define night as being between 1am - 8am EDT or 5am to 12pm UTC specifically.
Upper and lower Reset ratio bounds will also be available on the dashboard. The Reset ratio is defined as the total number of buys in the preceding hour divided by the total number of sales not made by the market maker (market maker will never buy assets anyway). In other words, the ratio = All Buys / User Sells. To clarify once again, the “market maker” is the Straato company, participating in the economy so as to facilitate and stimulate marketplace function. The ratio does not consider value or price, solely the number of trades. The reasoning behind this ratio is to incentivize users to engage in gradual selloff at the beginning of each cycle, so as to help us, the market maker, restart the economy in the next cycle.
While Straato may theoretically increase in price in perpetuity, it is expected that demand will slow, a reset will occur, and users may be unable to resell their Straato for a profit or at all. Straato LLC is not obligated to purchase Straato from users and cannot guarantee that demand for Straato will exist.