Polars Protocol (Public)

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POLARS PROTOCOL

BUSINESS MODEL

AUDIT

Predictions

White or Black

The formula for calculating the change in the price of polar tokens contains several basic parameters, including **Collateral for WHITE token**, **Collateral for BLACK token**, **Aggregate collateral for WHITE and BLACK tokens**, **Minted WHITE tokens**, **Minted BLACK tokens**, **Basic volatility** and **Popularity** **Coef**.

$WhitePopularCoef=BlackColleteral/WhiteColleteral$

If the WHITE token users bought more, and its collateral is greater than the BLACK token collateral, then the WHITE Token Popularity Coef will be less than 1, and the BLACK Token Popularity Coef will be greater than 1.

$WhitePopularCoef=900000/1000000=0.9<1$

$BlackPopularCoef=1000000/900000=1.111>1$

The platform has 2 options for Popularity Coef influence, one of which is selected when creating a Prediction Pool:

**Option 1.**Popularity Coef affects the Basic Volatility of the winning team (And the Basic Volatility of the losing team remains unchanged)**Option 2.**Popularity Coef affects the Basic Volatility of the losing team (And the Basic Volatility of the winning team remains unchanged)

At the moment, we have given priority to the first option, so we will use it in further examples and formulas.

Change in prices of polar tokens

In order to calculate the future price of polar tokens if any of the teams win, we need to understand how the collateralization will be redistributed between WHITE and BLACK tokens. To do this, we need to add BasicVolatility * PopularityCoef to the collateral of the winning team, and subtract BasicVolatility from the collateral of the losing team. Further, it remains to divide the new collateralization of polar tokens into Minted Tokens and we will receive a new price of polar tokens.

$NextWinnerPrice=NewWinnerTokenCollateral
/MintedWinnerToken$

Let's look at the calculations using an example

Start WHITE Price (BUSD): **0.55**

Start PLACK Price (BUSD): **0.46**

Start WHITE Collateral (BUSD): **110000**

Start BLACK Collateral (BUSD): **98000**

Minted WHITE tokens: **200000**

Minted BLACK tokens: **213043**

Basic Volatility: **5%**

Let's see how the price of polar tokens will change if Black Team wins. First we calculate the new BLACK price, then we calculate the new WHITE price.

$BLACKPopularityCoef=110000/98000=1.1224$

$NewBLACKCollateral = 98000+98000*0.05*1.1224=103500$

$NewBLACKPrice = 103500/213043=0.485817$

$NewWHITECollateral = 110000-110000*0.05=104500$

$NewWHITEPrice = 104500/200000=0.5225$

Total, new prices for polar tokens:

WHITE Price (BUSD): **0.5225 **(-5%)

BLACK Price (BUSD) **0.4858 **(+5.6%)

Now users can freely buy and sell polar tokens at new prices in the Prediction Pool. This process is cyclical and most likely has no end.

If the result of the event turns out to be a draw, then the price of polar tokens in this cycle will remain unchanged.

Last modified 2mo ago

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Change in prices of polar tokens