Establish token floor price guarentees using KPI options

You could use KPI options to provide a floor price guarantee for buyers of a new token during a token generation event.

Token prices can be very spiky, especially in the weeks and months after a token generation event, so a “floor price” KPI option can reassure early buyers and smooth out trading on the lower end.

In this scenario, the buyers receive both the token and an additional LSP token that represents a claim on some ETH, BTC, or stablecoin that the project team raised during initial funding. If the regular token price drops below a certain level, they get a bigger payout from the LSP token. This gives buyers confidence that they retain some minimum value if the token price trends downward.

This is a powerful use case that can easily be implemented using UMA’s existing contracts, which makes it a great hackathon project. It would be even more interesting if it was incorporated into a comprehensive fundraising strategy for a new DAO or protocol issuing a token, which could include success tokens, outcome-based KPI options issued to specific teams, or other clever applications of UMA’s contract systems.