2021-12-16 19:39:09
Hello everyone! This is going to be somewhat of a long announcement, so apologies for that.
There have been several occasions where I have talked about arbitrage trading, whether it be in AMA's, Twitter Spaces, or in our community. In case you need a refresher, arbitrage trading is when someone takes advantage of the small differences in price between $GDT amongst different markets. Arbitrage trading is nothing new; it exists in every competitive market that exists, including crypto.
That being said, a few days ago the team noticed that someone has been using an algorithm (aka bot) to exploit our PancakeSwap pools and create arbitrage opportunities. Despite a 22% total tax being applied on each trade (11% buy / 11% sell) and the difference in price of $GDT never exceeding 10 - 15%, this person has been able to successfully and consistently accumulate $GDT at a lower price and dump it at a higher price. This effectively tanks the price of $GDT on PancakeSwap. We have come to the conclusion that they are able to do this because of the large difference in liquidity between PancakeSwap V1 (~$500,000) and PancakeSwap V2 (~$80,000). The less liquidity a liquidity pool has, the higher the price impact is - buys and sells have a larger effect on the price. This is the functionality that the bot has been taking advantage of.
Before you ask why we don't balance the pools to make the liquidity in each the same, we can't. ~$500,000 is locked in V1 until April 10th, 2023. In order to curb this arbitrage trader and protect the price of $GDT, we must remove all GDT/BNB and close the PancakeSwap V2 liquidity pool. Closing V2 will have no effect on current or future holders; $GDT purchased from V2 can still be sold on V1.
But do not fear, we have come up with a fantastic solution. Since our V1 liquidity pool is already extremely strong, we are not going to simply stick this ~$80,000 of liquidity back into V1. We will be doing a "buy back burn". We will use the BNB from V2 to purchase $80,000 worth of $GDT from V1 and burn it. All $GDT removed from V2 will also be burned. As a matter of fact, by the time you're reading this, it has already happened.
Here's the proof/links:
V2 liquidity removal
https://bscscan.com/tx/0x56229854ea7c6f9e7f5442126a8946cf6f62986a55938a9416f5bfe32b8aac8c
[146.621 BNB received]
[9,280,190,000,000 $GDT received]
$79,000 buy with V2 liquidity
https://bscscan.com/tx/0x96d377f04af55d19b46d5c3d13ad3d72bc1df3619ad10ae3000d719c1a8530c9
[146.621 BNB spent]
[7,217,409,568,220 $GDT received]
Burn
https://bscscan.com/tx/0x2b034bfe9fec42e99f5f3bf2f003f3a95f686f15628532dbec352698c0da9c28
[9,280,190,000,000 $GDT from V2]
[7,217,409,568,220 $GDT from buy back]
[16,497,600,000,000 total $GDT burned]
162 viewsMason, edited 16:39
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