Token Buybacks via Redemption Pools

Learn how weighted liquidity pools can support efficient token buybacks to support price during volatile times.
Redemption pools can be used to support efficient token buybacks which can be useful for DAO’s and projects to buyback their native token with reduced market volatility while simultaneously maximising the amount of tokens returned to the treasury.
When undertaking token buybacks via traditional AMM models, treasuries aren’t realising the full potential of their buyback. They may need to buy their token at a higher price which is good for a short term spike, however, that means less tokens are accrued by the treasury, which means less tokens are taken off the market, which can have a negative long term impact on the price of the token. As a result, less value is accrued by the treasury in terms of quantity of tokens and the overall impact of the buyback is not as effective as it could have been.
Conversely, undertaking a treasury buyback via Fjord enables projects to use weighted pools to enable a slow and steady accumulation of governance tokens back to the treasury. The result is a reduced market impact, leading to higher accrual of tokens, less tokens on market, and an improved treasury composition.