The Mechanism
Introduction
The $JIMBO mechanism is designed to thrive in the long run and partially ensure its value relative to ETH while benefiting early adopters and long-term holders.
Liquidity is always available without incentives or inflation, and downside risk is known at all times.
The total supply of $JIMBO is 69,420,000 tokens, and it is released through a Trader's JOE pool. 50% of the tokens (34,710,000) are distributed over 50 bins at a 1% increment, while the remaining 50% of tokens are in the 51st bin for future liquidity redistribution upon rebalance events. (For more information on liquidity rebalancing events, see Liquidity Rebalancing)
When users get $JIMBO tokens from the pool, all of the ETH remains locked in the pool as liquidity.
When users buy and sell $JIMBO, a 4.5% tax is applied, of which 2.5% is burned permanently. 1.5% is directed to a single staking vault to reward $JIMBO stakers, and .5% is sent to Jimbo's wallet.
Rebalancing
Additionally, $JIMBO has an automatic liquidity rebalance mechanism. At any given time, there is a "Trigger Bin" 5 bins ahead of the original actively traded bin. When the Trigger Bin runs out of $JIMBO, a liquidity rebalance is automatically executed. This removes all ETH side liquidity and re-distributes it as follows:
10% of the total ETH in the pool to "Anchor Bins" as immediate trading liquidity 5 bins away from the current active price, while the remaining 90% of ETH in the pool is used to provide liquidity at the floor price in a single bin (Floor Bin).
Anchor Bins serve to stabilize $JIMBO trading around the current market price without needing to utilize the majority of protocol owned liquidity, so long as the market is willing to trade $JIMBO at a premium to it's guaranteed floor price.
Anchor Bins are arranged to grow in liquidity the further price trades from the currently active bin—the more $JIMBO is sold in the market, the more liquidity is deployed to absorb it.
However, Anchor Bins are not infallible. In cases where large sells impact the market all ETH liquidity in the Anchor Bins may be depleted. In this case, the Floor Bin provides sufficient liquidity for all circulating $JIMBO to be sold into if no one wants to hold $JIMBO.
When Anchor Bin liquidity is depleted, a different automatic liquidity rebalance mechanism is triggered. Jimbo sees the depletion of Anchor Bin liquidity that the current market price cannot be sustained, so it "resets": the floor bin is moved to the appropriate price, and all $JIMBO owned by the protocol is redistributed to the next 51 bins: 1% to the first 50 bins, and 50% to the last bin.
By doing so, the price of $JIMBO resets to the floor price and allows for new organic price discovery to emerge with sufficient liquidity for buyers at fair prices. This prevents the $JIMBO price from whiplashing between the floor price and the last purchased bin, with insufficient liquidity to support trading in between the two.
Finally, as $JIMBO tokens are sold into the floor bin, rather than staying there and suppressing price movement from moving upwards, the sold $JIMBO tokens are recycled back into the liquidity pool and added to the final bin, allowing for better price discovery and preventing later entrants from buying significant amounts of $JIMBO at the floor price.
For more details, please see the Liquidity Rebalancing Scenarios section.