Avareum
  • Introduction
  • Why Avareum?
  • How Avareum Works?
    • Fund Operations
    • Fund Subscription
    • Fund Redemption
    • Fund Rebalancing
    • Fee Management
    • Strategy-Aware Assets
    • Fund Tokens
    • Price Oracle
    • Risks and Mitigation Plans
  • FAQ
  • Investment Strategies
    • Introduction
      • Decentralized Finance
        • Features of Decentralized Finance
        • Decentralized Finance Architecture
        • Decentralized Finance Category
        • DeFi Service Incentive Scheme
      • Stablecoins
    • Avareum Stable Fund
      • Investment Objective
      • Investment Vehicles
      • Eligibility
        • Stable Asset Eligibility
        • Protocol Eligibility
        • Layer 1 Protocol Eligibility
        • Layer 2 Protocol Eligibility
      • Asset Allocation
    • Risk Management
      • Risk Identification
  • Tokenomics
    • AVAR Token
      • Advance Funds Investment Right
    • Token Allocation
      • Token Valuation
    • Token Auction Mechanism
    • Avareum Fundamentals
      • Supply Mechanism
      • Demand Mechanism
      • AVAR Burning Rate
      • Valuation Framework
    • Incentivization and APR
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  1. Tokenomics
  2. Avareum Fundamentals

Demand Mechanism

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Last updated 3 years ago

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The utility function of AVAR in the Avareum protocol causes there to be an inherent & deterministic demand for AVAR. The AVAR used for the advanced fund strategies investment rights will be staked as long as owners invest in the Avareum fund with the AUM size big enough to gain full benefit from staking AVAR tokens.

Given the following variables, a certain annual AVAR demand denominated in dollars can be calculated:

  • Total AUM size

  • Average investment size of investors' account

  • Management fee

  • AVAR market price

Over time, the AVAR demand curve will be shifting to the right—assuming an AUM of Avereum fund growth that outpaces the growth of market capitalization of AVAR tokens.

On the other hand, as more AVAR is burned, the AVAR supply curve will shift to the left. Both of these trends contribute to upward pressure on AVAR market price.