Split¶

TL;DR

Auction proceeds split two ways through the Afterburner's two modes: Buy + Burn executes a leveraged buyback-and-burn of the collection's RUN token. Buy + Bank executes a leveraged borrow of $LOOP and holds it permanently, growing the position with every sale.

How It Works¶

Sale Proceeds (RUN)
        │
  ┌─────┴─────────────┐
  ▼                   ▼
Buy + Burn (30%)     Buy + Bank (70%)
  │                   │
  ▼                   ▼
Leveraged buyback    Leveraged borrow
+ burn RUN           + hold $LOOP
  │                   │
  ▼                   ▼
RUN deflation        $LOOP position grows

Fees from both ──→ Open Bid ──→ next cycle

After a Dutch auction completes, Loophole splits the sale proceeds (denominated in the collection's RUN token) into two streams. Both are executed by the Afterburner.

Buy + Burn (default 30%)¶

This portion executes a leveraged buyback-and-burn of the collection's RUN token. 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.

Buy + Bank (default 70%)¶

This portion executes a leveraged borrow of $LOOP and holds it permanently — the position will never be sold back onto the market. Each NFT sale adds to the position, compounding over time.

The growing $LOOP position earns $LOOP↔ETH swap fees in ETH. That ETH is used to buy $LOOP, which flows into the Open Bid to fund further NFT acquisitions — creating recurring buy pressure on $LOOP in the process. More sales → larger position → more ETH fees → more $LOOP bought → bigger Open Bid → more sales. The leveraged borrow activity also drives $LOOP BLV growth.

The split ratio is configurable per collection. The default 30/70 favors $LOOP accumulation because the compounding fee revenue 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%) → Buy + Burn. Leveraged buyback from the $PUDGYRUN market. Tokens burned. Circulating supply drops, increasing the value per remaining token since the same reserves now cover fewer tokens.
210,000 $PUDGYRUN (70%) → Buy + Bank. Leveraged borrow of $LOOP, held permanently — taken off the market for good. The position earns ETH fees, which are used to buy $LOOP for the Open Bid.

Net result: $PUDGYRUN supply contracts (raising per-token value), the collection's $LOOP position grows (taking $LOOP supply off market and driving BLV growth), and the fees generated by both operations flow back into the Open Bid to fund the next acquisition.