What's going on with LQTY circulating supply

Note: For reference, please look at the Price change in the past 7d ( May 3, 2021 - May 10, 2021) and make sure to display the Mkt Cap graph.

The market cap of LQTY went from ~$400K to ~$70M in a few days but the price of LQTY barely moved. The price didn’t move much so I assumed that the supply must have gone up by a lot.

On May 4, 2021
At a price of $21.19 and a market cap of $455,424 the circulating supply was:
~ 21,493 ( Since I couldn’t find a graph with the circulating supply I deducted that from the equation market cap = price x circulating supply )

On May 5, 2021
At a price of $23.22 and a market cap of $64.85M, the circulating supply** was:
~2,792,851

That’s an increase of 2,771,358 on the circulating supply in just 24 hours.

I went through LQTY macroeconomics and it states that:

  • “The staked LQTY pool earning consists of the issuance fee revenue and redemption fee revenue”.
  • "with more LQTY tokens issued, LQTY price decreases. However, the depreciation effect can be counteracted by the growth of the earning.”

Finally, in LQTY documentation state that:

  • “As technical rewards, they (LQTY) are based on a preprogrammed functionality of the protocol and not on a claim towards Liquity AG or any third party.”

Is it possible that the supply increased that quickly for LQTY token?
Wouldn’t that mean that there are exponentially more LSUD token being deposited and LQTY token being rewarded?

Sources:

  • CoinsmarketCap – for the graph
  • Liquity Macroeconomic Model - Theory & Results
  • LQTY Distribution and Rewards Documentation

Good question. Although it’s probably better to ask in their Telegram group and report back if they have a good answer.

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