Token Supply and Distribution
Token changers are smart tokens that contain numerous reserve tokens and have a total CRR (Constant Reserve Ratio) of 100%. They can be used to convert any regular BEP-20 tokens they have in reserve. A token changer is designed to provide an exchange function between its reserve tokens by purchasing the smart token with one reserve token and liquidating it instantly for another.
The price of reserve token X falls each time it is converted to reserve token Y due to the price calculation methodology, while the price of Y increases. Larger transactions will cause the price to move more quickly, but a larger reserve level will lessen price volatility.
As previously stated, any standard BEP-20 token, even if it is already traded on other exchanges, can be used as a reserve token. In such a case, a price discrepancy between a reserve token's computed price and its price on an external exchange may emerge. This circumstance presents an arbitrage opportunity, incentivizing arbitrageurs to restore economic equilibrium, maintaining the prices of token changers in line with the rates at which their reserve tokens are sold on other exchanges.
The creator of a token changer can establish a conversion cost that will be applied to each purchase/liquidation. Fees can collect in reserves, increasing the smart token's price with each token conversion, hence boosting the smart token's worth. This rise will benefit smart token holders who may have deposited the smart token's original reserves when it was formed, or purchased it with any of its reserve tokens later.
Hundreds of millions of dollars worth of assets were stolen from popular exchanges like MtGox and Bitfinex after they were hacked. Using a token changer to convert one token to another eliminates the need to deposit funds in an exchange, removing the counterparty risk from the equation. Another significant advantage is that, due to the token changer's decentralized structure, no transaction restrictions are required, as is the case with other rapid trading alternatives. While decentralized exchanges give this benefit as well, smart tokens provide liquidity without relying on trade volume.
By simply owning a portfolio of reserve tokens with a total CRR of 100%, smart tokens can be utilized as decentralized token baskets that perform similarly to ETFs or index funds. The value of the smart token fluctuates with the price of any of the reserve tokens. Arbitrageurs, like token changers, are rewarded for realigning conversion rates with market prices, ensuring that suitable ratios between reserves are maintained based on their current market worth. These smart tokens allow users to hold asset baskets directly without the need for a financial services company to act as an intermediary.