Product Update: The Sweetcoin Discount Calculator

After releasing our system whitepapers, the most burning question that our community members wanted to know about was how Sweetbridge’s discount token, Sweetcoin (SWC), will work.

For these members, and the rest of our community, we have created this blog post, a demo video , and the handy new Sweetcoin discount calculator (at https://swccalculator.sweetbridge.com).

Watch the Discount Calculator demo video on the Sweetbridge YouTube channel here: https://youtu.be/dS5-wIbUzjk

What is Sweetcoin?

In the Sweetbridge economy, members pay fees for services such as: Joining the Sweetbridge economy, interest on loans, Exchanging Bridgecoin (Sweetbridge’s stable token) to a different currency, Using the economy’s Settlement Bus and others. The other significant component of the Sweetbridge economy is Sweetcoin (SWC), the economy’s discount token. Sweetcoin enables a member to discount the fees they accrue, or, in some cases, even to completely eliminate them.

To receive discounts, members are required to hold and activate Sweetcoin. When activated, Sweetcoin is locked for a fixed time period and cannot be used again or transferred until the end of the period. The right amount of Sweetcoin to activate is determined based on the user’s decision as described below.

What is the right amount of Sweetcoin for you?

Each Sweetcoin you activate eliminates a small portion of your fees. There is a current discount value, cents per Sweetcoin activated, that Sweetbridge will report to you at all times. For example, if the discount factor is ten cents per Sweetcoin, then to eliminate $10 of fees per month you will need to activate 100 Sweetcoin. Note that having received a $10 discount for services in the current month, you will be able to use the same Sweetcoin again the next month, but not before then. So to eliminate $10 of fees every month forever you only need 100 Sweetcoin, assuming that the discount value is not reduced.

The current discount value is determined based on the performance of the Sweetbridge economy. When the economy grows, the discount value grows with it. The rate of the economy growth is determined as the total amount of all fees before discounts within Sweetbridge. At the same time, the more Sweetcoin is activated by the members, the lower the discount value. More specifically, we consider 3 different variables to determine the Sweetcoin discount value: total Sweetcoin activated within the Sweetbridge economy, total fees before discounts paid by members of the economy and the economy’s discount factor, which is a constant number.

Let S be defined as the total Sweetcoin activated by all members in the economy during the previous 30 days. Let F denote the total fees before discounts collected from all the members of the economy in the last month. Let (1/β) denote the economy’s discount factor. This variable controls the percentage of the total liabilities the economy can discount.

To calculate the discount value we put this all together as:

Sweetcoin discount value = F/(S*β)

Let’s use an example with some real numbers:

Let’s say that in the past month Sweetbridge members have activated 2M Sweetcoin and accrued $5M in fees before discounts. The economy’s discount factor is 50% (Sweetbridge will launch with β=2). In this scenario Sweetcoin’s discount value= $1.25/ month

In the equation above all of the variables are measured on a monthly basis. Similarly, the time period during which Sweetcoin transferability is restricted as a result of activation is one month.

How does all this look in practice?

When members take out a loan on the sweetbridge platform, they will be able to determine the size of their loan and also the amount of interest they would like to pay for it. The mechanism to choose the interest rate is determined by a set rate which is defined by the asset type collateralized, that can be reduced with Sweetcoin activation. The more Sweetcoin the member activates the lower the rate of the loan, leading up to zero-interest loans.

To help the user decide on the amount of Sweetcoin to activate, the panel above will be used. The slider in it allows the member to define his preferred interest rate based on the economy-wide figures mentioned before (total Sweetcoin activated, total Fees before discounts and the economy’s discount factor). This mechanism will calculate the required activated Sweetcoin and will populate the white field in the panel. Alternatively, the member can also provide the amount of Sweetcoin he would want to activate and the system will derive the amount of discount that he will get as a result. Using this panel, the member will be able to choose the exact rate and fee that he will be required to pay for his loan.

Similar panels will enable users to waive any other fees in the system.

How to use the Sweetcoin discount Calculator

In the following Sweetcoin discount calculator you can learn how the value of an activated Sweetcoin will be impacted by changes in the economy’s total fees and total Sweetcoin activated. In addition, members can see how much Sweetcoin they will need in order to get their preferred interest rates on loans, including interest free ones under different scenarios.

Determine the size of your loan. At this point you’ll see the default interest associated with the asset type you are collateralizing (our default interest rate here is 15%) . Here, you will be able to take advantage of your Sweetcoin to reduce these fees! If you decide to reduce your loan’s fees, click on the drop down arrow next to the % number.

4. This will open your “select your interest rate” panel. Here, based on the amount of Sweetcoin you own, you can adjust your interest rate to your preferred amount (for the purpose of this calculator, we granted you with 100,000 mock Sweetcoin so you will be able to activate as many Sweetcoin as you want). As you slide the interest rate slider to your prefered interest rate, the system will calculate the required amount of Sweetcoin you will need to activate and display it on the field below. If you prefer, you can also insert the number of Sweetcoin you would like to activate and see the impact on your interest rate. As a result of this activation, these Sweetcoin will be locked for a month. Then, you will be able to decide whether you would like to use them for a different purpose or activate it again against these fees. Once you are done with your choices, click on the “Borrow” button and make sure that your preferred interest rate is shown there as well.

5. Now, you can click “Calculate” to see how many fees you have waived in this process with your Sweetcoin!

6. At the top of the screen you can now see the new fee amount you should pay due to the Sweetcoin activation next to the original amount you were supposed to pay. Also, you can see the total amount of Sweetcoin you have decided to activate and the impact on your monthly fees.

7. In the charts at the bottom of this page you can see the value over time that a member will earn by buying Sweetcoin and using them regularly for discounts throughout their lifetime in comparison to the value over time of Sweetcoin for an individual that acquired Sweetcoin as a speculative unit that will be sold after a similar time frame. More about this below.

For advanced users we’ve created an additional section. In this section you will be able to change the economy figures and see how these impact the discount value of your Sweetcoin:

After clicking on the “Advanced” collapse button, three more fields will show up On the first line of this section you will be able to determine the total amount of Sweetcoin activated in the past month throughout the economy On the second line of this section you will be able to set the total fees that were collected in the past month from all the members throughout the economy On the third row of this section you will be able to adjust the economy discount Factor, Beta (β). Remember that 1/β is the max amount of liabilities that could be waived by Sweetcoin activation.

In addition to the advanced section, we also created another section to understand better the value over time of using Sweetcoin. Here you will be able to learn more about the value over time of buying and using Sweetcoin discounts.

5. Expand the “Value Over Time & Opportunity Costs” section

6. Determine the price of Sweetcoin you have originally paid

7. Here you should specify your estimated growth rate of the Sweetcoin price on an annual basis

8. Lastly, there is an optional field to fill in the cost of capital of this investment, which translates to what is the opportunity cost of this investment (i.e. what is the return that you could earn on an alternative investment)

Based on these adjustments, the header figures and charts at the bottom of the page will change.

As you can see, due to the unique discount token mechanism the Sweetbridge system is much more attractive for members who use their Sweetcoins for discounts rather than just speculating on them.

For a tutorial that will walk you through the calculator and its operation, please view the video below:

Video walkthrough of the new tool: https://youtu.be/dS5-wIbUzjk

I hope that this blog post and the linked calculator answers many of the questions you had about the Sweetcoin discount token. If you still have any questions, or feedback, regarding Sweetcoin and their discount value please post these on the blog comments below, or reach us on our telegram channel (https://t.me/sweetbridge ) or on our Rocket.Chat app (https://chat.sweetbridge.com ).