Lithium Finance New Pricing Mechanism And Reputation Scoring System

Published on: 07.04.2022

Lithium Finance is building an innovative pricing mechanism for illiquid assets. Tremendous value will be unlocked by producing accurate price estimates across the NFT, DeFi, and traditional finance ecosystems through the Lithium protocol.

Since the release of its first Litepaper, Lithium Finance have been in privileged to have received many insightful feedback through user research and community engagement. These allowed them to continually improve the protocol design as updated in its whitepaper.

Key updates include:

Terminology: Ecosystem participants seeking and providing pricing information to be consistently referred as Price Seekers and Price Experts to enhance clarity.
Reputation Scoring: Introduction of a new reputation token, the Market Influence Capital (MIC), which is a non-transferable, non-purchasable metric for signaling the reputation of Price Experts. Through this metric, Price Experts with a track record of high performance will enjoy greater influence in pricing among the pool of other Price Experts.
Pricing Mechanism: Implementation of a system for two-way (in bid and ask) price inputs, and a market clearing logic that takes into account reputation token staking to produce pricing estimates output.
Reward Mechanism: Incentive structure to encourage accurate price estimation for the asset(s) in question. Price Experts’ entitlement in the reward pool for a pricing enquiry are allocated based on their respective stakes and pricing accuracy.

More details are available on Lithium Finance updated whitepaper.

ABOUT Lithium Finance
Lithium Finance is the first decentralized collective-intelligence mechanism that provides accurate and timely pricing information. Its protocol brings market participants together through economic incentives to estimate pricing for illiquid assets on demand.