Overview

At the heart of the Goldilocks project are the LOCKS governance token and the bespoke AMM, called `Goldiswap’, that governs its behaviour. Goldiswap is distinguished by a few key innovations and advantages. Most importantly, it

(i) Allows users to borrow a significant portion of the liquidity of their tokens at any time without interest payments, risk of liquidation, price impact or relying on third parties.

(ii) Creates an up only floor price for all tokens that trade on the AMM.

To see how Goldiswap achieves this, note first that it contains two basic liquidity pools, the floor supporting liquidity pool (FSL) and the price supporting liquidity pool (PSL). Both pools are comprised entirely of HONEY, Berachain's native (fully collateralized) stablecoin. Using these pools, Goldiswap has the ability to burn and mint LOCKS through the following basic mechanisms:

(i) Firstly, a user can always redeem LOCKS tokens in exchange for a proportional share of the FSL. More precisely, if S is the total supply of LOCKS, then Goldiswap allows a user to redeem 1 LOCKS token for a quantity of HONEY equal to FSL/S. We call FSL/S the `floor price’ of LOCKS, since it represents a minimum price for which a LOCKS token can always be redeemed via Goldiswap. Upon redemption, Goldiswap burns all the redeemed LOCKS tokens, ensuring that redemption can never lower the floor price of the remaining tokens.

(ii) As well as redeeming LOCKS for the floor price, users can also sell LOCKS to Goldiswap at the market price, which will always be greater than the floor price. In that case, they will burn their tokens in exchange for a proportional share of the FSL as well as some amount of the PSL (see the Mechanisms page for a description of how the market price is determined by Goldiswap).

(iii) Finally, users can buy LOCKS from Goldiswap by paying the market price (never less than the floor price), in exchange for which the protocol mints them the appropriate number of LOCKS tokens.