Liquidity Rebalancing Scenarios
Floor Bin: absolute lowest price per token (in ETH) guaranteed by the protocol
Anchor Bin(s): ETH denominated bins
Active Bin: currently traded bin
Token Bin(s): $JIMBO denominated bins sold by the protocol
Trigger Bin: liquidity bin that triggers a rebalance after it is completely bought out
In the intial pool state, the Active Bin trades ~5 bins below the Trigger Bin.
Buying $JIMBO from the pool will naturally move the Active Bin past the current Trigger Bin.
When this happens, Jimbo rebalances the ETH liquidity by taking the protocol-owned ETH in the pool and distributing it across a Floor Bin and Anchor Bins.
The Floor Bin price is determined by 90% of the total ETH in the pool divided by the circulating supply of $JIMBO, ensuring an absolute lowest price where all $JIMBO can be repurchased by the protocol.
In the case where there are not enough bins to add 5 anchor bins, we will add the liquidity to a single bin under the active bin. The Anchor Bins are a set of 5 bins next to the Active Bin containing 3%, 2.5%, 2%, 1.5%, and 1% of the total ETH in the pool, respectively. The Anchor Bins provide immediate liquidity to $JIMBO at the most recently traded price to stabilize the market.
In the intial pool state, the Anchor Bins are supporting market activity at the current price premium with concentrated liquidity.
Selling $JIMBO in the pool will naturally move the Active Bin below all the liquidity provided in the Anchor Bins.
When this happens, Jimbo rebalances the $JIMBO liquidity by taking the protocol-owned $JIMBO in the pool and distributing it across a new set of Token Bins. Additionally, the Redemption Bin and Anchor Bins are combined into a single bin, recalculated to a new risk-free price based on 100% of the total ETH in the pool. In essence, the protocol "resets".
The Token Bins are a set of 51 bins with the first 50 bins containing 1% of $JIMBO owned in the pool, and the last (51st bin) containing the remaining 50% of $JIMBO in the pool. This allows for enough upside price discovery of $JIMBO while keeping the bins condensed enough for the protocol to keep gas usage manageable when conducting liquidity operations.
When the Floor Bin is the Active Bin, any sales of $JIMBO are exchanged for ETH at the floor price of the token. Without any actions from the protocol, any $JIMBO sold in this bin will need to be re-bought before the price can move again, and all $JIMBO purchased in this bin will effectively be bought at the risk-free value.
To ensure that price can rise again, Jimbo re-hypothecates $JIMBO in the floor bin periodically, moving them to the final token bin to be re-sold at a higher price, ensuring continued growth of the protocol.
Although the recycled $JIMBO are moved to the final Token Bin, they will eventually get redistributed when the Token Bins are reset upon the collapse of an Anchor Bin, thickening $JIMBO liquidity of the protocol and creating more potential upside price movement.