How PyroTokens work
Any token listed on Behodler AMM is eligible to have its own PyroToken.
Implicit in the exchange equation is that input tokens are burnt. For tokens that cannot be burnt such as ETH or standard ERC20s, the fee set aside for burning is sent into the reserve pool for their corresponding PyroToken.
Suppose we have some LINK tokens. We deploy a wrapper token PyroLINK. PyroLINK wraps LINK similarly to how WETH wraps ETH. There is an algorithmically defined redeem rate used to calculate how much PyroLINK is minted for every unit of LINK.
Let's assume the redeem rate is 1. Then if you send 1 LINK to PyroLINK, you receive 1 PyroLINK. The LINK you sent is then held in reserve. If someone later redeems a PyroLINK, they receive 1 LINK.
The redeem rate is calculated as balance_of_reserve_token / supply_of_pyrotoken
For instance, if there are 1000 LINK held in reserve and 100 PyroLINK circulating then the redeem rate is 1000/100 = 10. This means if I purchase 1 PyroLINK, I require 10LINK. similarly if I redeem 4 PyroLINK, I will receive 40 LINK.
There are 2 ways the redeem rate can change:
  1. 1.
    burning PyroTokens reduces supply (denominator)
  2. 2.
    Adding reserve tokens without minting PyroTokens (numerator)
On every trade of a token in Behodler, a small fee is levied on input 0.5% and sent to its corresponding PyroToken reserve, thereby instantly increasing the redeem rate. The exceptions are for tokens that can burn such as WeiDai ,EYE and MKR. These tokens are simply burnt on trades.
When PyroTokens are redeemed, a 2% exit fee is burnt, thereby pushing up the redeem rate for remaining holders. The exit fee means that if a token is ever loses popularity and is dumped, those dumping the pyro equivalent will increase the value, thereby stemming the losses. PyroTokens are dump resistant.
Finally, transfers of PyroTokens burn 0.1%. This is to allow high holders to benefit from frequency bot traders.
Those who wish to hold a long position on a tokens may wish to rather mint the Pyro version since the redeem rate can never fall but because of regular trading on Behodler and exit fees will always grow.
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