Token Distribution
1. Token Issuance
The HSF will be issued when an investment product is sold. If a $1 million product is registered on the platform and $1 million is deposited in the pool through USDT, an HSF of equal value will be provided as collateral for participants who deposit USDT.
Example) If you deposit $100,000 USDT for a $1 million product, 10% of the product's rights will be recorded in the contract and $100,000 HSF will be provided simultaneously.
The $1 million USDT deposited will immediately be paid to the product owner who registered his contract, and the rights to the contract will be transferred to the platform.
Participants who deposited USDT will acquire the contract and HSF, and they can cash their HSF at any time by trading on the market.
For example, if a user who has $100,000 ownership and HSF sells 50% of his total HSF to the market, the right to the product will remain only $50,000, the amount of HSF will be 50% of the original amount.
If a user holds his HSF as collateral until the expiration date of the original contract fund, he will earn interest in proportion to the amount of USDT deposited in the contract fund, and if the collateral is disposed of halfway, the remaining rights will be paid.
For example, suppose $1 million product has generated 20% profit and is liquidated at $1.2 million. If a user holds $0.1 million HSF at the end, all HSF will be collected by the foundation and the profit will be automatically paid in USDT (in this case, the user will receive $0.12 million USDT). If the user has disposed 50% of his HSF, he will receive $0.06 million USDT as the return.
All HSFs are issued only when fund products are sold, and Hillstone does not guarantee absolute safety or unconditional income. However, investors have the advantage of avoiding losses from huge price drop of our currency since HSF is pegged by actual fund products.
If the price of HSF rises, you can sell collaterals (HSF) to realize your profits, and if the price of HSF falls, you can continue to hold the HSF as collateral, the interest of fund product will protect you from the price drop of HSF.
Most importantly, the fact that HSF issuance must be carried out in conjunction with fund products can theoretically protect HSF price from falling significantly.
2. Token Demand 2-1. Purchasing Tokens to Participate in Fund Products (Fund Pool Participants)
Suppose you deposit $100,000 USDT into a $1 million product, and sell half of your deposit ($50,000) to the market. A room that is worth $50,000 will be automatically generated inside the fund pool.
Users can only stake HSF into this room. This means that Hillstone Finance platform separates the primary sale—USDT from the secondary sale— HSF
For a USDT pool (primary sale), the pool capacity is limited—people can only deposit $1 million in a $1 million fund pool. But for HSF pool (secondary pool) there is no limit for the pool capacity. At the time of liquidation, the amount of HSF determines the revenue for each participants.
For example, a $50,000 HSF room will be created if participants who deposit $100,000 USDT in a total fund pool sell 50% HSF to the market. Participants will receive $50,000 (5% of $1 million) in revenue from fund liquidation if they leave the 1000 HSF alone in the room. If other participants deposit 1000 HSF along the way, the ratio becomes 5:5 (1000 HSF out of 2000 HSF), and each participant will receive $25,000 in revenue. When an additional 2000 HSF deposit participant is added, revenue will be shared at a rate of 2.5: 2.5: 5. In other words, the total amount of deposit is unlimited and returns are distributed according to the proportion of HSFs deposited at the time of final settlement.
HSF participants can maximize their earnings by depositing the right amount of HSF in the fund. If users expect a high return of a fund, it will be more profitable for them to deposit HSF in the room even if the HSF price goes up.
If the HSF price is low in the market, participants can buy HSF in bulk and deposit them into the room to increase their share in this room.
In other words, if the initial fund returns are expected to increase, more people will stake their HSF. This will enable Hillstone to take more HSF back to the pool reserve, less HSF will be circulating in the market as a result.
2-2. Staking for the Purpose of Pool Generation (Fund Seller)
Sellers who wish to sell their fund products through our platform must deposit an HSF equivalent to 0.1% of the total capacity of the fund product.
At this time, the seller can acquire HSF through exchange or swap.
For example, a seller who wants to transfer his contract to Hillstone Finance (fund registration) for $1 million need to purchase $1,000 HSF through an exchange or swap and deposit it when he uploads his contract to the platform. If a total of $1 million USDT is deposited in the fund pool, the seller will receive $1 million USDT as the investment. If the product failed to reach 70% of the total capacity, the contract will be returned to the seller and the HSF will be returned as well.
When a product is sold, the seller receives the USDT, and HSF he deposited will be returned to the seller at the time of income distribution to the participants.
If staking is not closed within a certain time, all deposited USDT and HSF deposited by the seller will be returned.
Token Price Mechanism
Suppose there is an “Alpha Project” that was initially created as a pool of 100,000 USDT. HSF with the same value of 100,000 USDT will be deposited as collateral rights in the Alpha Project. Higher expected returns on alpha projects will increase the demand for staking in the secondary-sale room (please refer to 2-1 in Liquidity), and this will let users buy 1 HSF at a higher price than 1 USDT. There are also people who give up their rights in the contract by cashing their HSF for fast liquidation and short-term profit. This action further increase the size of the room, thus further increasing the number of people who wish to buy HSF at high price to stake in this room. On the contrary, even if the price of HSF drops, people are expected to buy HSF at bulk size to stake more HSF into the room. This will decrease the circulating supply of HSF, and thus increasing the price of HSF.
In other words, the supply of HSF token increases when a project opens a new pool on our Investors platform, and the
demand for HSF increases as the expected revenue of projects increases.
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