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@@ -2,7 +2,9 @@
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sidebar_position: 4
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---
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# Dutch Auction Exit: Fair and Controlled Liquidity Release
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# Dutch Auction Exit
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> Fair and Controlled Liquidity Release
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To keep our liquidity pool strong and sustainable, we use a Dutch auction system for exits. This creates a market-driven, disciplined, and fair process that protects long-term participants and discourages opportunistic withdrawals.
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@@ -62,16 +64,16 @@ Let's say:
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- There can be other rules too (e.g., minimum price thresholds)
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- LPs submit the following bids:
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| LP | Amount | Minimum Price |
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|----|--------|----------------|
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| A | €500k | €0.088 |
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| B | €600k | €0.090 |
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| C | €400k | €0.092 |
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| D | €700k | €0.095 |
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| E | €300k | €0.098 |
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| F | €200k | €0.100 |
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| G | €500k | €0.105 |
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| H | €400k | €0.110 |
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| LP | Amount | Minimum Price |
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| --- | ------ | ------------- |
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| A | €500k | €0.088 |
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| B | €600k | €0.090 |
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| C | €400k | €0.092 |
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| D | €700k | €0.095 |
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| E | €300k | €0.098 |
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| F | €200k | €0.100 |
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| G | €500k | €0.105 |
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| H | €400k | €0.110 |
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After sorting from lowest price to highest, we fill bids starting from the bottom. The system stops when total accepted bids reach €3 million.
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@@ -98,12 +100,12 @@ The margin between what a bidder was willing to accept and the final clearing pr
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## Why This Works
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| Benefit | Description |
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|---------|-------------|
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| **Fair** | All successful bidders receive the same clearing price |
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| **Protective** | Exits only happen with a discount, preventing abuse |
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| **Incentivizing** | Remaining LPs gain rewards when others exit |
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| **Sustainable** | Controls liquidity outflow with capped exit volume and loss-based exit mechanics |
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| Benefit | Description |
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| ----------------- | -------------------------------------------------------------------------------- |
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| **Fair** | All successful bidders receive the same clearing price |
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| **Protective** | Exits only happen with a discount, preventing abuse |
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| **Incentivizing** | Remaining LPs gain rewards when others exit |
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| **Sustainable** | Controls liquidity outflow with capped exit volume and loss-based exit mechanics |
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---
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@@ -24,20 +24,20 @@ graph TB
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subgraph Internal["ThreeFold Ecosystem"]
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TFT_LOCKED[🔒 Locked TFT]
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CC[💎 Cloud Credits CC]
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TFTF[📊 TFT Future TFTF]
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TFP[📊 TFP TFP]
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POOL1["Pool 1: TFT → CC<br/>(One-Way Entry)"]
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POOL2["Pool 2: CC ↔ TFTF<br/>(Internal Trading)"]
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POOL3["Pool 3: TFTF ↔ USDC<br/>(Controlled Exit)"]
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POOL2["Pool 2: CC ↔ TFP<br/>(Internal Trading)"]
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POOL3["Pool 3: TFP ↔ USDC<br/>(Controlled Exit)"]
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end
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TFT_MARKET -->|Buy TFT| POOL1
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POOL1 -->|Lock TFT<br/>Mint CC| CC
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CC <-->|Convert| POOL2
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POOL2 <-->|Based on TFT price| TFTF
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POOL2 <-->|Based on TFT price| TFP
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TFTF <-->|Dutch Auction<br/>5% cap, 20% discount| POOL3
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TFP <-->|Dutch Auction<br/>5% cap, 20% discount| POOL3
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POOL3 <-->|Controlled bridge| FIAT
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style POOL1 fill:#e1f5ff
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@@ -71,14 +71,14 @@ Your CC is pegged to gold (~$0.128 per CC as of Oct 2024)
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---
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### 2. Internal Movement (Pool 2: CC ↔ TFTF)
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### 2. Internal Movement (Pool 2: CC ↔ TFP)
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**What it does**: Lets you maintain TFT exposure while holding stable CC
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**How it works**:
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- You earn CC from farming or have CC from services
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- You can convert CC to TFTF (TFT Future) based on current TFT market price
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- TFTF represents a claim on TFT value without holding actual TFT
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- You can convert CC to TFP based on current TFT market price
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- TFP represents a claim on TFT value without holding actual TFT
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- You can convert back to CC when needed
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**Key point**: This allows you to **participate in TFT upside** without immediately exiting to fiat.
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@@ -87,14 +87,14 @@ Your CC is pegged to gold (~$0.128 per CC as of Oct 2024)
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```
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You earned: 500 CC from farming
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TFT market price: $0.10
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You convert → 500 CC becomes 5,000 TFTF
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If TFT rises to $0.15, your TFTF value increases
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You convert → 500 CC becomes 5,000 TFP
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If TFT rises to $0.15, your TFP value increases
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You can convert back to CC at any time
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```
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---
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### 3. Exit to Fiat (Pool 3: TFTF ↔ USDC)
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### 3. Exit to Fiat (Pool 3: TFP ↔ USDC)
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**What it does**: Provides a controlled bridge to cash out to fiat currency
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@@ -108,7 +108,7 @@ You can convert back to CC at any time
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**Example**:
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```
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You want to exit: 10,000 TFTF (worth ~$1,000)
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You want to exit: 10,000 TFP (worth ~$1,000)
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You're willing to accept: 20% discount minimum
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Others bid: 15%, 18%, 22%, 25%, 30%
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Clearing price: 22% (your bid gets filled)
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@@ -140,8 +140,8 @@ graph LR
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A[User Needs] --> B{What do you need?}
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B -->|Stable pricing for services| P1[Pool 1: TFT→CC<br/>Get stable credits]
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B -->|Keep TFT upside exposure| P2[Pool 2: CC↔TFTF<br/>Maintain position]
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B -->|Cash out for operations| P3[Pool 3: TFTF→USDC<br/>Controlled exit]
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B -->|Keep TFT upside exposure| P2[Pool 2: CC↔TFP<br/>Maintain position]
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B -->|Cash out for operations| P3[Pool 3: TFP→USDC<br/>Controlled exit]
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style P1 fill:#e1f5ff
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style P2 fill:#fff4e1
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@@ -152,7 +152,7 @@ graph LR
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Gives you predictable pricing for cloud services without exposure to TFT volatility.
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### Pool 2: Flexibility
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Allows you to move between stable CC and TFT-linked TFTF based on your market outlook.
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Allows you to move between stable CC and TFT-linked TFP based on your market outlook.
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### Pool 3: Liquidity
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Provides real fiat exit when needed, with controls that protect all participants.
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@@ -171,15 +171,15 @@ graph TD
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USE -->|Spend on services| SERVICES[☁️ Use ThreeFold Cloud]
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USE -->|Hold as stable value| HOLD[💎 Keep CC]
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USE -->|Want TFT exposure| CONVERT[Convert to TFTF in Pool 2]
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USE -->|Want TFT exposure| CONVERT[Convert to TFP in Pool 2]
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SERVICES --> BURN[CC Burned by Network]
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HOLD --> WAIT[Wait for opportunities]
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CONVERT --> TFTF_HOLD[Hold TFTF Position]
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CONVERT --> TFP_HOLD[Hold TFP Position]
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TFTF_HOLD --> TFTF_USE{What next?}
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TFTF_USE -->|Need stability again| BACK[Back to CC in Pool 2]
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TFTF_USE -->|Need fiat| EXIT[Enter Pool 3 Dutch Auction]
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TFP_HOLD --> TFP_USE{What next?}
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TFP_USE -->|Need stability again| BACK[Back to CC in Pool 2]
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TFP_USE -->|Need fiat| EXIT[Enter Pool 3 Dutch Auction]
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EXIT --> BID[Submit bid with discount]
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BID --> AUCTION{Bid filled?}
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@@ -226,8 +226,8 @@ graph TD
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<summary><strong>Can I get my TFT back immediately?</strong></summary>
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Not instantly. You need to:
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1. Convert CC to TFTF (Pool 2)
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2. Exit TFTF via Dutch auction (Pool 3) to USDC
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1. Convert CC to TFP (Pool 2)
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2. Exit TFP via Dutch auction (Pool 3) to USDC
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3. Buy TFT on the market with USDC if you want TFT again
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The original TFT you deposited is locked to back the CC that was minted.
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@@ -239,13 +239,13 @@ The original TFT you deposited is locked to back the CC that was minted.
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Perfect! Just keep your earnings in CC. You get:
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- Stable value (pegged to gold)
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- No exposure to TFT market swings
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- Ability to convert to TFTF later if you want upside
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- Ability to convert to TFP later if you want upside
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</details>
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<details>
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<summary><strong>How do I benefit from TFT price increases?</strong></summary>
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Convert your CC to TFTF in Pool 2. TFTF value tracks TFT market price, so if TFT goes up, your TFTF position becomes more valuable in CC or USDC terms.
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Convert your CC to TFP in Pool 2. TFP value tracks TFT market price, so if TFT goes up, your TFP position becomes more valuable in CC or USDC terms.
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</details>
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<details>
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@@ -266,17 +266,17 @@ Fundamentally different. Traditional AMMs use value-weighted pools with instant
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Now that you understand the overall flow, dive deeper:
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1. **[Token System](/core-concepts/token-system)** - Understand TFT, CC, and TFTF roles
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2. **[Position-Based Liquidity Pools](/core-concepts/position-based-lp)** - Learn why this approach is fair
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3. **[Dutch Auction Exit](/core-concepts/dutch-auction-exit)** - See exactly how exits work with examples
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4. **[Yin-Yang Currency](/core-concepts/yin-yang-currency)** - The philosophy behind dual tokens
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1. **[Token System](/core-concepts/token-system)** - Understand TFT, CC, and TFP roles
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2. **[Position-Based Liquidity Pools](/roadmap/position-based-lp)** - Learn why this approach is fair
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3. **[Dutch Auction Exit](/roadmap/dutch-auction-exit)** - See exactly how exits work with examples
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4. **[Yin-Yang Currency](/appendix/yin-yang-currency)** - The philosophy behind dual tokens
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---
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:::tip Simplified Summary
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- **Pool 1**: Get in (TFT → CC)
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- **Pool 2**: Move around (CC ↔ TFTF)
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- **Pool 3**: Get out (TFTF → USDC)
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- **Pool 2**: Move around (CC ↔ TFP)
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- **Pool 3**: Get out (TFP → USDC)
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All three work together to give you **stability**, **flexibility**, and **controlled liquidity**.
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:::
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