Insula Token (ISLA) 

Insula Token (ISLA) is the unit of account within Insula software ecosystem.

ISLA utility token is a voucher directly redeemable for Insula’s commoditised funds (capital) and fund services (human capital).

Commoditised digital Goods access:

ISLA is directly redeemable for Insula Crypto Funds tokens on secondary markets. 

Insula funds use a fraction of their performance fees to perform regular ISLA buybacks & burns on the open market.

20+ autonomous and interconnected smart contracts optimise their holdings for Insula Token and auto-arbitrage the ISLA market 24/7.

Commoditised digital Services access:

ISLA is also a voucher redeemable for Insula Consulting & Insula fund-as-a-service subscription.

Example: ETH → ISLA

10 ETH and 500 ISLA (ERC20) are deposited into a smart contract by liquidity providers. An invariant is automatically set such that ETH_pool * ISLA_pool = invariant.

ETH_pool = 10

ISLA_pool = 500

invariant = 10 * 500 = 5000

An ISLA buyer sends 1 ETH to the contract. A 0.25% fee is taken out for the liquidity providers, and the remaining 0.9975 ETH is added to ETH_pool. Next, the invariant is divided by the new amount of ETH in the liquidity pool to determine the new size of ISLA_pool. The remaining ISLA is sent to the buyer.

Buyer sends: 1 ETH

Fee = 1 ETH / 500 = 0.0025 ETH

ETH_pool = 10 + 1 – 0.0025 = 10.9975

ISLA_pool = 5000/10.9975 = 454.65

Buyer receieves: 500 – 454.65 = 45.35 ISLA

The fee is now added back into the liquidity pool, which acts as a payout to liquidity providers that is collected when liquidity is removed from the market. Since the fee is added after price calculation, the invariant increases slightly with every trade, making the system profitable for liquidity providers. In fact, what the invariant really represents is ETH_pool * ISLA_pool at the end of the previous trade.

ETH_pool = 10.9975 + 0.0025 = 11

ISLA_pool = 454.65

new invariant = 11 * 454.65 = 5,001.15

In this case the buyer received a rate of 45.35 ISLA/ETH. However the price has shifted. If another buyer makes a trade in the same direction, they will get a slightly worse rate of ISLA/ETH. However, if a buyer makes a trade in the opposite direction they will get a slightly better ETH/ISLA rate.

1 ETH in
44.5 ISLA out
Rate = 45.35 ISLA/ETH

Purchases that are large relative to the total size of the liquidity pools will cause price slippage. In an active market, aribitrage will ensure that the price will not shift too far from that of other exchanges.

Ethereum Liquidity Pools

Polygon Liquidity Pools