# π΅Value Guarantee for Friddy Coins

## Friddy as a Value Hold

The comment on the question assumes that Friddy coin and FriddyP are being traded on the public market, hence prone to market supply-demand dynamics.

Our coins are circulating in Friddyβs fully closed ecosystem. When a coin is backed by other crypto coins and circulated in the open market, it is susceptible to the owners buying and selling at a different pricing, lower or higher, which naturally puts the coin at risk of fluctuating price. In our closed system, Friddy coins are issued and transacted against the backing and transacted against the transaction demand coming from the merchant, when its assigned value for backing and transacted against merchant transactions the value of it always comes from Friddy. The LP, buyer, and merchant have no control over that value, hence it is always 100% stable.

The flow provided flow and the spreadsheet calculationβs aim is to provide proof that the total cost of the transaction is negligible in comparison to the revenue generated and the mechanism of how it works.

But to test the potential risks of the Model let us understand the following aspects of Friddy, and FriddyP since we have outlined the flow of the token Let's answer how the backing preserves the coin's intrinsic value

## The Model

Assuming merchant volume is measured in USD, we can calculate the average transaction by dividing total merchant volume by the number of transactions. Merchant Volume Per Day is merchant volume divided by 30. Merchant Volume Per Transaction is merchant volume divided by the average transaction.

To process merchant volume, we need a number of Liquidity Providers (LP) which can be calculated by dividing merchant volume by a variable deposit amount in USD provided by the LP. Each LP deposit has a fixed cost.

We can calculate the number of transactions each LP can process by dividing their total deposit by the average transaction, assuming there are a number of LPs who deposited an average amount each day.

Each time an LP deposits, they make a 1% profit on their total transactions. The number of transactions they can process is calculated by dividing their total deposit by the average transaction.

The profit made in the previous deposit is added to the total deposit each time an LP deposits. This is known as a compounded deposit, which is always used in processing merchant volume.

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