Automated Pricing Engine
Introduction
The last piece of the puzzle is determining the price of the option, which will be the Security Deposit, and from which the Settlement Price will be defined as Strike - Security Deposit
The key here is to create a system that is going to reflect changing market demand, to be able to always have a balanced price between Buyers and Sellers and facilitate as many matches as possible
We looked at different pricing mechanisms available in crypto, and have been particularly influenced by what Lyra is doing, so thanks guys for the inspiration!
This Pricing Engine is a work in progress, and we will continuously work to make it better every day.
This system is initially totally offchain, to allow us to develop it, refine it, and manage to really create an efficient model to price NFT collections floor price options. However, our objective long term is to reach a more open pricing system, where we are not responsible for defining pricing anymore.
At a high level, what we need to be able to make the Pricing engine work are :
A pricing model
Initial parameters to feed the model
A process to define when and how parameters will evolve
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