# How does the Skyward Treasury work?

Example of sale #1: \$SKYWARD Sales

Let’s use the 25% \$SKYWARD sale as an example. Imagine there was 1 Million NEAR added; thus, 1 million NEAR is a demand and 250,000 \$SKYWARD is a supply. For simplicity, we will keep the demand fixed in this example.

Once sale is over, and 250,000 \$SKYWARD is sold for 1,000,000 \$NEAR, all 1,000,000 NEAR is being deposited to the treasury. This means that every 1 \$SKYWARD token is backed by 4 \$NEAR tokens after the sale.

What can you do with it?

Now you have 2 options:

1. Add \$SKYWARD to Ref Finance and expect a higher price due to expected increased size of the treasury in the future (since every sale on Skyward Finance has a 1% fee on the token that is being sold and 1% on a token that’s being to purchase offered token). Thus, Skyward Treasury will continuously increase.
2. Redeem \$SKYWARD. If you redeem 1 \$SKYWARD, you receive 4 \$NEAR from the Skyward Treasury and the 1 \$SKYWARD is burned (removing it from the circulation forever). This operation doesn’t affect the rate of \$SKYWARD.

Example of sale #2: MOON (non-\$SKYWARD sale)

Someone wants to sell 500,000 \$MOON tokens for \$nUSDT. Let’s imagine that there were 2,000,000 \$nUSDT deposited (for simplicity, let’s keep it fixed).

This means that 5,000 \$MOON (1% from 500,000 \$MOON) tokens and 20,000 \$nUSDT (1% of 2,000,000 \$nUSDT) were added to the Skyward Treasury. So right now Skyward Treasury has:

• 1,000,000 \$NEAR
• 20,000 \$nUSDT
• 5,000 \$MOON

This means that the incremental value of 1 \$SKYWARD token increased by 0.08 \$nUSDT (20,000 \$nUSDT / 250,000 \$SKYWARD) and by 0.02 \$MOON (5,000 \$MOON / 250,000 \$SKYWARD).

Thus, all non-\$SKYWARD sales after 25% sale #1 of \$SKYWARD are going to accumulate value until the \$SKYWARD sale #2.

### What happens at \$SKYWARD sale #2?

At this stage, we anticipate that \$SKYWARD will be traded on Ref Finance. Since Skyward Finance platform does not have an ability to set the price, it means that sale #2 can potentially create arbitrage opportunities.

Example 1: The expected rate of \$SKYWARD on the sale #2 is lower than the price from the sale #1 - thus, it’s an arbitrage opportunity. You can enter the sale #2 and receive cheaper \$SKYWARD (than the first sale) and then redeem the \$SKYWARD token to Treasury or sell \$SKYWARD on Ref to receive an additional value. Skyward Treasury is tied to a Circulating supply; thus, in this scenario, all participants of the first sale are being diluted, while new entrants can receive an instant profit.

In this case, the \$SKYWARD can be either redeemed from the Treasury or traded on Ref Finance. Redeeming \$SKYWARD gives you a nominal value that’s backed by Skyward Treasury. Ref Finance in theory should have a different value attached to \$SKYWARD that will be based on the future expectations for the size of the Skyward Treasury and Circulating Supply.

Example #2: The expected rate of \$SKYWARD on the sale #2 is higher than  the price from the sale #1. In this scenario, existing holders of \$SKYWARD will benefit from the sale #2, because the Treasury backed price will be increased.

### Do people who entered the sale earlier get a better price?

Prior to the sale, the rate history is displayed for the informational purposes only. Everyone will get the same rate once the sale starts, but different amount of \$SKYWARD based on their amount of \$NEAR.

More questions? https://skyward.finance/faq/