How it works

At the heart of our fly-wheel sits a single smart contract and the AI agent that controls it. It is responsible for all functions of the ETF and all transactions with the smart contract are done in $ETH.

For developers:

Developers seeking a community and increased volume for their project can permissionlessly send a percentage of their token's supply to the ETF smart contract. Upon receipt, Lairry Fink (the world's first ever bald AI agent) evaluates the token based on an n-dimensional analysis framework which includes but is not limited to real-time analysis of the wider market meta/narrative, onchain metrics, value accrual mechanisms, token distribution, innovation/novelty factors, team expertise/background, code repositories, community activity levels, percentage of supply received, dollar value of the supply received, social sentiment around the token.

If the evaluation criteria is met, the AI agent lists the project on the ETF with a certain percentage allocation. And from that point onward each time ETF shares are minted or redeemed, the smart contract buys or sells a corresponding amount of the project's token on the open market.

For investors:

Investors who want exposure to the ETF deposit $ETH it in to the ETF smart contract. Once deposited, the smart contract sells $ETH and buys underlying portfolio assets (according to percentage allocations set by the AI) and mints new share tokens to the depositor wallet. These share tokens represent their portion of all portfolio assets held in the smart contract.

To redeem shares, investors deposit their share tokens to the smart contract which then burns them, sells their share of the underlying portfolio assets for $ETH and sends it to the depositor wallet.

The positive-sum fly-wheel:

This mechanism creates a flywheel effect: investors are attracted to the ETF because they gain exposure to a diversified basket of thoroughly vetted projects, a basket which is continuously expanding as new projects wish join by sending a percentage of their token's supply. Meanwhile, developers are incentivized to contribute more tokens to the ETF, as a listing ensures increased attention through Lairry Fink's social and real volume whenever ETF shares are minted or redeemed.

The open-sourced and verified smart contract maintains sole custody over user deposits. Only this contract can execute buying and selling of assets according to specified allocation percentages by the AI agent. This ensure no external party can withdraw the portfolio assets.

Initially, the allocation is set to a 100% for $ETH in the ETF. Gradually, Lairry Fink will give allocations to other promising projects in a risk-minimized way as it evaluates and lists them on the ETF.

ETF Share tokens:

An ETF share is calculated by

TotalAssetValue / SharesOutstanding

where TotalAssetValue is the total value of the portfolio assets and SharesOutstanding is the total count of shares that are currently held by investors.

Therefore, minting and redeeming of shares doesn’t affect the price of a share as both TotalAssetValue and SharesOutstanding always either increase or decrease proportionally when shares are minted or redeemed.

Only a change in TotalAssetValue can change the price of a share. This can happen when prices of the underlying portfolio assets change or new supply of tokens is sent to the ETF smart contract by developers.