Split¶

TL;DR¶

Auction proceeds split two ways: first, the Afterburner performs a leveraged buyback-and-burn of the collection's LRT. Second, the remainder converts to $LOOP and deposits into $LOOP reserves. This grows the value of both token layers, simultaneously.

How It Works¶

Sale Proceeds (LRT)
        │
  ┌─────┴─────────────┐
  ▼                   ▼
Afterburner (30%)    LOOP BLV (70%)
  │                   │
  ▼                   ▼
Buyback + burn LRT   LRT → LOOP → reserves
  │                   │
  ▼                   ▼
LRT deflation        LOOP floor rises

Swap fees from conversions ──→ Open Bid ──→ next cycle

After a Dutch auction completes, Loophole splits the sale proceeds (denominated in the collection's LRT) into two streams.

Afterburner (default 30%). This portion executes a leveraged buyback-and-burn of the collection's LRT. The purchased tokens are permanently removed from circulation, reducing supply. Fewer tokens share the same reserves, so each remaining token's per-token guaranteed floor price (BLV) rises.

LOOP reserves (default 70%). This portion converts from LRT to LOOP and deposits into LOOP reserves, permanently raising LOOP's BLV (Baseline Value) or floor price. Because every collection's auctions feed into the same $LOOP reserves, and all LRTs are paired with $LOOP, every sale grows value ecosystem-wide.

The split ratio is configurable per collection. The default 30/70 favors LOOP reserves because reserve strength benefits all collections, not just the one generating the proceeds.

Example¶

A Pudgy Penguin sells at auction for 300,000 PudgyRun. The proceeds split:

90,000 PudgyRun (30%) → Afterburner. Bought back from the PudgyRun market and burned. PudgyRun circulating supply drops by 90,000 tokens.
210,000 PudgyRun (70%) → LOOP reserves. Converted to LOOP and deposited into reserves. LOOP's BLV floor rises.

Net result: PudgyRun supply contracts, LOOP reserves grow, and the swap fees generated by both conversions flow back into the Open Bid to fund the next acquisition.