Perfect Peg

Pegging in Finance is linking the value of an asset with another asset

In the traditional economy before the advent of Smart Contract Automation there was no way anywhere to create Perfect Peg (a perfect link between two assets allowing the holders of the pegged asset to instantly exchange their asset to the other asset at will whenever they want)

In the traditional economy, governments illegally maintained a monopoly over the use of violence to be able to create their old version of government-forced Peg by linking the Dollar with Oil (The Petrodollar system)

In the new world economy on top of Blockchain, there is for the first time a way to create Perfect Peg and BabylonSwap is the first DEX (Decentralized Exchange) to ever do it

In short as swaps happen in every BabylonSwap market (pair) there is a fee of 0.1% that goes to those who provide liquidity to that pair (market)

Those fees will inevitably get to a point where it becomes profitable for people to provide liquidity to that pair to earn those yields (rewarded fees)

People can provide liquidity to that pair ONLY by having both tokens of the pair available in their wallet and then converting those tokens to BSLP Tokens (BabylonSwap Liquidity Pool Tokens)

0.25% of every Add Liquidity and Remove Liquidity event is locked forever as ready-to-use liquidity

Arbitrage in Finance is the use of liquidity to profit from undervalued and overvalued prices in a specific market (pair)

Once Liquidity starts getting locked this guarantees arbitrage opportunities cuz someone will inevitably take advantage of that new Automated Buyer/Seller (Locked BSLPs)

To be able to provide liquidity and participate in the profits of the 0.1% swap fee, people need to acquire the two tokens meaning they will need to trade them by doing a swap/trade, either directly in BabylonSwap or somewhere else causing arbitrage opportunities in BabylonSwap that will inevitably get filled, which means these participants inevitably cause more fees to be rewarded to the liquidity providers in BabylonSwap

These new trades will create more yields that will maintain the economic incentives necessary to cause the Add Liquidity and Remove Liquidity events to happen continuously which will keep locking liquidity continuously and there is literally no way to stop it

The process above will never stop because there is always an automated buyer/seller ready to make the trade so there will always be trading activity to profit from arbitrage opportunities causing more yield causing more locking of liquidity which results in Perfect Peg

At all times the price of a perfectly pegged asset can not fall beyond a certain threshold because as sellers hammer the price with their selling the price will be defended by the available locked liquidity in addition to the liquidity providers themselves who will maintain liquidity levels high enough to participate in the profitable yield coming from all the sellers’ swaps’ 0.1% fee, and the available locked liquidity will keep increasing as more farmers (liquidity providers) add and remove liquidity as a reaction to this yield

As you can see the system always stabilizes itself with more liquidity being locked continuously with no possibility to stop it because of Game Theory laws (resulting in Perfect Peg)

For the first time you can buy an asset and rest assured it is mathematically guaranteed to succeed because it is perfectly pegged thanks to the BabylonSwap technology

Babylon Token (XBT) is pretty much the first Guaranteed investment in history because Mathematics are simply unstoppable