Minting
How Gypsy prevents diluting old investors
One of the major benefits of Gypsy's protocol is its potential for growth far exceeds traditional REITs. The way it does this is by following these rules when purchasing Gypsy tokens:
If GPSY on-chain price is above Backing Price, mint new Gypsy tokens at the backing price
If GPSY on-chain price is below Backing Price, purchase Gypsy tokens from an exchange
These rules provide both price stability at the backing price of Gypsy as well as enable new investors to enter without diluting current token holders.
Rule 1: Buying Gypsy when the price is equal to or above the backing price
When the price of Gypsy is above that of the backing price, it means there is an influx of individuals buying more Gypsy. Instead of those investors buying existing gypsy at an overvalued price, the protocol instead mints new tokens at the backing price.
Results of minting the new token:
Gypsy's supply goes up
Gypsy's price goes down if above backing & stays the same if the backing price is at the token price
Gypsy's on-chain price returns to around the backing price
Gypsy gets the funding to purchase the next home
Minting new Tokens
The new tokens are minted based on the following formulas
Example:
With a theoretical NAV of $1M and 1000 tokens in circulation, the price per Gypsy is $1000. If the current on-chain price of GPSY is $1000 and a new investor purchases $500,000 worth of Gypsy the following will occur:
Since the price of Gypsy is at the backing price, new tokens will be minted. Following the formula, the NAV + UsdgPaid is 1.5M and the token supply is 1000. The resulting token circulation will be 1500 with 500 new Gypsy minted. The resulting price per token is 1.5M / 1500 which is $1000.
Rule 2: Buying Gypsy when the price is below the backing price
When the price of GPSY falls below the backing price, Investors then purchase Gypsy from exchanges. These investors would purchase GPSY "at a discount" to the NAV of the portfolio.
Results of buying the existing token:
Gypsy's price goes up
Gypsy's on-chain price returns to around the backing price
What does this enable?
This mechanism for purchasing new tokens enables the following.
Rent-to-own
Rent-to-Own allows a portion of rental payments to be used to reinvest in the fund. Rental payments are collected and used in the fund to buy more properties, generating rental income and appreciation.
Compounding Rental income
Compounding rental income is a direct result of reinvesting rental income into the NAV to buy more homes. This then increases the NAV of the Gypsy properties as well as the rental income earned every month.
Hyper Growth
New investors are able to invest in Gypsy without diluting current investors. This allows Gypsy's portfolio of homes to continuously grow.
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