OTC Market

Until this launch, the only way to obtain ELCT was by farming it using PROTO in the Nucleus pools. ELCT could be converted to PROTO using the Swapper, but not the other way around. The OTC Market enables investors to both buy and sell Electron (ELCT) using Proton (PROTO). A 5% fee is applied to each transaction, and the ELCT and PROTO taken in fees are burned.

How can I buy or sell ELCT?

To buy or sell ELCT, go to the OTC Market (also available in the main menu of the dApp). Existing buy and sell orders will be visible in the respective tabs. If you find an appropriate order, simply execute it. If not, click the "Create Buy/Sell Order" button to place a new order. Make sure you have sufficient PROTO and/or ELCT funds in your wallet for the order.

How is it different from Swapper?

With OTC trade, investors can obtain a better PROTO:ELCT ratio compared to the swapper (at most 1:1) without creating extra inflation or selling pressure on PROTO.

To better understand this, consider the following example:

Let’s say Alice wants to sell her 10,000 ELCT.

With the swapper: She goes to Swap ELCT for PROTO. She gets at most 10,000 PROTO, if there is no penalty. Fir this trade, 10,000 PROTO was minted and 10,000 ELCT was then burned.

With the OTC marketplace: Let’s say Alice wants to sell her 10,000 ELCT for 15,000 PROTO and Bob decides to buy them. A 5% fee is applied to the transaction, and the ELCT and PROTO taken in fees are burned.This means Bob receives 9,500 ELCT and Alice gets 14,250 PROTO.

Technical Details:

For the Swapper trade,

• 10,000 PROTO would need to be minted, which results in an extra market supply of 10,000 PROTO.

• If she then decides to sell it all, it results in additional inflation and selling pressure for PROTO.

For the OTC market trade,

• the PROTO received by Alice was purchased by Bob on the market (and not newly minted).

• Even if she decided to sell all her PROTO, they are fewer than what Bob purchased for the transaction, thus resulting in net buy pressure on PROTO for each trade.

• Also, Alice could obtain a better PROTO:ELCT ratio (1.5 : 1) compared to the swapper (1 : 1) without creating extra inflation or selling pressure on PROTO.

Additionally, you'll find ELCT sell orders from ProtoFi's team wallets (trades tagged with the label ProtoFi) in the Sell Orders list. We're selling a portion of ProtoFi's ELCT reserves and using the PROTO earned to bolster the Nucleus pools' liquidity. Nucleus LPs will be created by selling 50% of the PROTO for FTM or USDC. This will have the following effects:

1. Farmed ELCT from the Nucleus pools will be put up for sale again in a cyclical manner, to foster a positive feedback loop.

2. Boosted, reliable liquidity will help stabilise PROTO’s price and make it harder for PROTO to have big price swings.

In a future update the OTC market will support the purchase of ELCT with Nucleus LP tokens.