Prices and solvency

The price is Uniswap's. What Kolan adds is where the liquidity sits, and the promise that every window can be paid back.

The opening#

At launch the hook puts the whole supply into one position that runs from the opening price to the highest price Uniswap can express. A range above the price holds tokens only, so the pool opens with tokens and no ETH, at a $10,000 market cap: one million tokens at $0.01 each, converted to ETH with Chainlink's price as the launch is signed.

From there it trades as a constant product: the more is bought, the higher the price, and every buyer's ETH stays in the pool as the support the next seller sells into.

currency0   ETH
currency1   the token
fee         0          // the 1% tax is the hook's, in ETH
tickSpacing 10         // prices move in steps of 0.1%
hooks       KolanHook

The price with windows open#

A window takes its tokens out of the pool without moving the price, and leaves a hole. The pool's price is then the price sellers meet; a buyer crosses the hole for free and pays the price after it. The quote on screen is what a buyer actually pays.

Solvency#

• The hook keeps a count of the ETH and tokens it holds for windows (held), and every window operation checks it still holds at least that much.
• A window's ETH never enters the pool while it is open, so no swap can spend it. Undoing pays it back from where it sits.
• The hook's record of its positions is checked against the pool's own state after every step of the invariant tests.
• Rounding works against the person acting, by a few wei: a window's opening pays its own, its closing takes it from the premium.