📈Price Discovery Mechanism

IPillar employs a rent-sale ratio model to enable efficient price discovery for intellectual property. By treating IP licensing fees as rent revenue, users can discover and understand the true value of an IP more easily. This approach offers fair pricing, ease of understanding, dynamic price adjustment, and market efficiency, contributing to the overall effectiveness of the IPillar platform.

1. Fair Pricing: The rent-sale ratio model allows IP creators and customers to arrive at a reasonable and fair price based on market dynamics. This ensures that both parties can agree on a licensing fee that accurately reflects the value of the intellectual property.

2. Ease of Understanding: Using a rent-sale ratio model to represent IP licensing fees simplifies the pricing process and makes it easier for users to understand. This intuitive approach enables a more transparent and accessible IP licensing market, benefiting all participants.

3. Dynamic Price Adjustment: The rent-sale ratio model allows for dynamic price adjustments based on changing market conditions, supply, and demand. This helps keep IP pricing up-to-date and relevant, ensuring that the value of IP licenses remains aligned with market trends.

4. Market Efficiency: IPillar's price discovery mechanism promotes market efficiency by providing a transparent and data-driven pricing method. This facilitates more informed decision-making and helps prevent market distortions, benefiting both IP creators and customers in the long run.

In conclusion, IPillar's unique price discovery mechanism, built on the rent-sale ratio model, offers a more transparent, fair, and efficient way to determine the value of IP licenses. This innovative approach contributes to the overall effectiveness of the platform in fostering a thriving global IP ecosystem that benefits creators, businesses, and consumers worldwide.

Smart Price AMM

The Smart Price AMM module is utilized to automatically price IP licenses. The pricing comprises two main factors: i) Starting price, which is the license price when purchasing a single unit (could be a unit of time or quantity); ii) Final license price when acquiring multiple units, taking into account the starting price and discounts based on the number of units purchased.

The pricing mechanism is designed based on the following principles:

1. When demand is high (transactions increasing), the price rises accordingly.

2. When demand is low (no transactions occur), the price decreases until two conditions are met: a) The price has dropped to the minimum price provided by the IP licensor when listing the IP; b) Another purchase takes place.

3. Additional discounts apply when purchasing more units.

Dynamic Start Price Adjustment

The starting price is currently determined by two factors: (1) the most recent starting price, and (2) the time interval between the current timestamp and the last transaction's occurrence.

The variable 'incrementByTx' represents the increase in the starting price after each new purchase. For example, if the current starting price is 1 USD, the next starting price will be increased by 0.1 USD to 1.1 USD. In contrast, 'discountPerTime' is the decrease in the starting price if no new purchases are made after a certain time interval, as defined by 'discountDelay' measured in days. For instance, if no new purchases occur within the specified time interval, the starting price will be reduced accordingly.

Price Discounts

The Sigmoid function is chosen as the fundamental mathematical formula to define the discount factor.

First the sigmoid_alpha is the curve to define the shape of the discount curve.

$$\text{sigmoid\_alpha}(max\_discount, x, \alpha) = \frac{2 \cdot max\_discount}{1 + e^{-\frac{x}{\alpha}}} - max\_discount$$

where the alpha above is to control the shape of the rate of the changes, x is the number of unit to purchase, and max_disounct is the maximum discounts for the purchase price.

With the sigmod_alpha above, to have the property that let starting price when unit is one, reduce the x by 1 to get the discount ratio as

$$\text{discount\_ratio}(max\_discount, x, \alpha) = 1 - \text{sigmoid\_alpha}\left(max\_discount, x - 1, \alpha\right)$$

The total final price then is calculated as

$$FinalPrice = x * \text{discount\_ratio}$$

The total price change with number of units and the alpha as shown in the diagram below.