💰Battle Settlement

When a battle concludes, a complex settlement process begins. Understanding this process can help you make informed decisions about your holdings and strategy.

TLDR:

• Trading is temporarily suspended (usually seconds) during settlement

• Losing coin's liquidity used for forced buys of winning coin

• Sequence of forced buys: conversion for losing holders, staker bonuses, buy and burns

• Buy-and-burns benefit remaining holders

• Locked liquidity transferred and maintained

This is an advanced topic, and is not essential to enjoy buying, selling and battling memecoins on Meme Royale.

However, if you want to understand more of the underlying mechanism, feel free to jump right in!

Settlement Process

1. Trading Suspension

   • Trading on both coins is temporarily suspended to prevent front-running

2. Loser Declared "Rekt"

   • The losing coin can no longer be traded on the bonding curve

   • Remaining supply of the losing coin is burned

   • The liquidity from the losing coin's bonding curve is used to execute a series of "forced buys" of the winning coin

3. Conversion Buys

   • If the losing side was defending:

     • All liquidity is used to buy winning coins in a single trade

   • If the losing side was attacking:

     • Non-stakers' portion bought first

     • Stakers' portion bought second (at a slightly worse rate, as a penalty for losing as the aggressor)

4. Staker Bonus (if applicable)

   • If the winning side was the attacker, 10% of the losing coin's liquidity is used to purchase a bonus for the winning side's stakers

5. Conversion Rate Calculation

   • All non-staking holders of the losing coin are converted at the same rate

   • Rate = (Number of losing coins in circulation) / (Number of winning coins purchased with losing coin's total liquidity, minus staker bonus)

6. Tax Pot Settlement

   • The accumulated "chicken tax" from sells during the battle is used for a final forced buy

   • These purchased coins are then burned, benefiting all remaining holders

7. Locked Liquidity Transfer

   • Any "locked" liquidity from the losing coin (from previous burns) is calculated

   • An equivalent percentage of the winning coins purchased during settlement is burned so that this liquidity is transferred as locked liquidity, and not as general liquidity

8. Chaining conversions ( if applicable)

   • If the losing coin had previously won battles and there are open rekt coins still to be converted from to the losing coin

   • The protocol solves for the "chained" conversion from the (old) rekt coin directly to the winning coin, avoiding the need for the holders to make multiple conversions.

Impact on Different Participants

1. Winning Coin Holders

   • Benefit from the "victory pump" of forced buys

   • Receive additional value from buy-and-burns deflationary mechanisms

2. Losing Coin Holders

   • Receive an allocation of the winning coin based on the conversion rate

   • While they've "lost" the battle, they now hold a pumped, victorious coin

   • Buy and burn mechanisms also benefit them, as these are carried out last

3. Winning Stakers (if applicable)

   • Get all of the benefit of winning coin holders

   • PLUS receive a bonus allocation from the losing coin's liquidity

4. Losing Stakers (if applicable)

   • Converted at a slightly worse rate than non-stakers (if they were the aggressor)

   • Otherwise get the same outcome as other losing coin holders

Post-Settlement

• The winning coin may enter a "dirty dump tax" period to discourage immediate selling. You can read more on the dirty dump tax here.

• Holders of the losing coin can convert their holdings to the winning coin at any time (no expiration on conversion). You can read more on converting rekt coins and claiming staked bonuses or conversions here.