The Price Function

The AMM determines the market price of each LOCKS token according to the following function.

Market price = Floor Price +((PSL/Supply)*(FSL+PSL/FSL)^6)

This price function ensures that LOCKS tokens never trade below their floor prices, whilst also allowing for price to represent market sentiment in a natural and controlled manner. In essence, the function ensures that the volatility of the market price increases exponentially as the PSL/FSL ratio increases. When the PSL/FSL ratio reaches 0.5, the AMM redirects all HONEY from buys towards the FSL until the ratio falls back below 0.5. This serves to secure the AMM against potentially dangerous forms of volatility.

Note that the AMM imposes a 5% tax on all sales of LOCKS. 100% of this tax is directed back into the PSL and FSL, in a manner that preserves the prior PSL/FSL ratio.