How $SLI Works
High-level mechanism
A market-driven token
SLI is a freely traded token. Its price is determined by market supply and demand and can fluctuate independently of the assets used by the protocol.
SLI does not follow a net asset value (NAV) and does not aim to replicate the price of any underlying basket. Instead, it operates as a rules-based onchain mechanism whose internal actions may indirectly affect the token supply over time.
Transaction fees as the core input
Every buy or sell of SLI applies a 3% transaction fee.
This fee is not discretionary and is applied uniformly to all market participants. It serves as the primary input for the protocol’s automated logic.
The fee is split as follows:
80% is used to purchase the underlying liquid staked SOL tokens,
10% is allocated to the team,
10% is allocated to the Bands platform.
All allocations are executed automatically and onchain.
Automated asset acquisition
The portion of fees dedicated to asset acquisition is used to buy the five predefined liquid staked SOL tokens.
Each asset is purchased in equal proportion, in line with the fixed index design. These purchases occur continuously as long as there is trading activity on the SLI token.
For each asset purchase, the protocol records a reference price used for subsequent automated actions.
Sell triggers and predefined multipliers
For every underlying asset acquired, the protocol places a predefined sell condition.
Each liquid staked SOL token has a sell multiplier set at 1.2× relative to its reference price. When an asset reaches this threshold, a partial automated sell is executed.
This process does not involve timing decisions, forecasts, or discretionary intervention. All triggers are purely mechanical and based on predefined rules.
Buyback and burn of SLI
When a sell condition is met, the proceeds from the asset sale are used to buy back SLI tokens from the open market.
The SLI tokens acquired through this process are then permanently removed from circulation via a burn.
This mechanism can reduce the total supply of SLI over time, depending on:
trading activity,
asset price movements,
and the frequency of sell triggers.
Continuous and cumulative process
Each transaction involving SLI contributes new asset purchases and new sell conditions.
As a result, the system operates as a continuous and cumulative process, where:
trading activity feeds asset accumulation,
asset price movements may trigger sells,
sells may lead to SLI buybacks and burns.
All steps are executed automatically and remain active as long as the protocol operates.
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