NUTS Token
Last updated
Last updated
Address: 0x8893D5fA71389673C5c4b9b3cb4EE1ba71207556
NUTS are the native token of Squirrel Finance. All fees charged by Squirrel are redistributed as dividends to users staking their NUTS in the NUTS Farm. As fees are collected they are pooled. Every four hours a smart contract runs which takes these pooled funds and buys NUTS, which are then distributed to stakers.
There is a constant "buy pressure" on NUTS due to insurance fees being used to buy NUTS from the market. This redistributes NUTS from the market to users accumulating in the Nuts Farm, while simultaneously raising the price.
The larger the TVL of Squirrel, the more fees it collects. The more fees it collects, the more dividends paid per one NUTS token. The more dividends paid, the more valuable the token. The approximate APR of holding a single NUTS token can be found on the NUTS Farm.
If an insurance payout is triggered, Squirrel will mint new NUTS and distribute the newly minted NUTS to the affected users. This dilutes the ownership of existing NUTS holders. This is equivalent to NUTS holders taking a loss to cover insured users, since the expected dividends per NUT falls as the supply increases assuming zero change in the TVL. By holding & staking NUTS you collect premiums but risk taking a loss when an insurance payout is due. As long as NUTS have value and users are willing to accept them as payouts, Squirrel can insure any product. See the Insurance section for more details.
Let us assume the following is true
$30m TVL on Squirrel
An average APR / APY of 200%
400,000 NUTS in the NUTS Farm
Insured farmers will make $60m in profits over the year. Squirrel charges 20% of the yield as an insurance fee, or $12m. A single NUT in the NUTS Farm will net ~$12m / 400k = $30 each per annum in dividends.
If an insurance payout is triggered, let us assume it raises the NUTS supply by 40,000. The number of NUTS that could exist in the NUTS Farm goes up by 10% and the expected dividend per NUT falls by 10%, or to $27 per annum.
NUTS requires liquidity to help stabilize the price. As Squirrel grows and more users join the platform the liquidity should hopefully grow as well. In the case of an insurance payout, the price of NUTS may become volatile as some users choose to sell the NUTS that they received as payout. Higher liquidity helps establish a better & more reliable marketcap which can help onboard new users to the ecosystem.
