Skip to main content

​
Floor price

The floor price is an AVA’s mathematically provable minimum value, denominated in its reserve asset. The AVM provides a bid large enough to buy back 100% of the supply at the floor price. It’s effectively an infinite on-chain buy wall. As a matter of mathematical certainty, the floor price can never fall, only rise. Rising Floor With Labels1 Gi

​
How the floor rises

The floor price rises through two primary mechanisms: protocol fees and recalibration. All floor raises are permanent.

​
Raising the floor price with protocol fees

A portion of fees from each market will be invested directly into raising its AVA’s floor price, increasing the floor steadily with every transaction. In practice, the protocol distributes fees to the floor every five minutes.

​
Raising the floor price with recalibration

The Assured Value Machine (AVM) recalibrates the price curve while preserving the total area beneath it (the area equals the reserve liquidity). This reallocates liquidity from above the floor, into the floor region, raising the floor price higher. The AVM performs a floor raise recalibration automatically once two conditions are satisfied:
  1. Trigger Price: The AVA’s price must reach the trigger price, a threshold that indicates there’s sufficient liquidity above the floor to support a raise while preserving the curve’s slopes.
  2. Cooldown timer: The floor will not rise if it has risen in the previous five minutes. Each raise resets the five-minute cooldown timer. 
The floor always rises by exactly 0.1% of its current value per recalibration. When the floor price rises from recalibration, the horizontal “floor region” moves higher. To keep the total area unchanged, the AVM shifts area from the positively sloped parts of the curve to the floor region. Importantly, it does this without changing the slopes (price-impact coefficients) of those rising segments. Concretely, the slopes stay fixed while only the intercepts are adjusted. Net effect: same slopes as before, a permanently higher provable minimum price, and no creation or destruction of value, just a reallocation of area that preserves solvency.

​
Governable price curve

The slope of the price curve is a governable parameter. When governance votes to change it ( ±10%), the change only applies to the highest-supply segment of the curve:
  • If the market is currently below that top segment, nothing changes yet; the new slope takes effect only once buys push price/supply into that segment.
  • If the market is already in the top segment when the change is enacted, the AVM creates a breakpoint at the current price/supply. To the left of that point (lower supplies), the old slope remains, honoring all the depth of liquidity for all past purchases. To the right (higher supplies), the new slope applies going forward.
Practically, after a slope change, future buys follow the new slope, but sells back into lower supply traverse the earlier (historical) slopes. This preserves solvency and prevents retroactive liquidity depth changes for past purchases while still letting governance tune liquidity depth at the frontier.
This approach keeps three things true at once: (1) reserves equal area under the curve, (2) floor raises never change the slopes, and (3) slope updates only affect future price impact where they’re intended—at the leading edge of supply and price.

​
Liquidity buffer

The liquidity buffer is a parameter that preserves a portion of liquidity above the floor beyond what is strictly necessary. In practice, the liquidity buffer increases the trigger price. Its purpose is to allow the market to maintain additional sell depth at elevated price levels. This parameter can be fine-tuned through on-chain governance for each market individually. 

​
The floor: the key to permanent value

The purpose of the floor is simple: provide assets with a verifiable minimum value that can only grow. The floor represents a verifiable, on-chain minimum value, supported entirely by protocol-owned reserves. It is designed fundamentally to only ratchet upward through activity and fee accrual. Market price can never fall below it. It is transparent and impenetrable, which means participants can exit at any time with certainty, without relying on buyers to show up. The floor provides downside protection, unlocks liquidation-free credit, and aligns incentives across the protocol. The age of speculation helped define new avenues of value, but failed to protect it long-term. Nirvana aims to change the status quo by assuring value permanently. This is made possible by the AVM, the automated system that governs price, liquidity, and the floor.