19th March 2025

CloudK - Addressing Market Volatility & GLP Increase

Over the past few months the cLFI prices have declined which has resulted in the inflation adjustments for the Growth Level Price (GLP).

This adjustment as part of the protocol, which was pending implementation, is to ensure the stability and sustainability of the rewards system amid fluctuations in market conditions, particularly the decline in cLFI/LYK prices. The inflationary adjustment in the cLFI reward system derives from the base cLFI price of 2.03, recorded on 1st July 2024, and is tied to this value to maintain equilibrium in reward distribution but GLP was not updated correctly.

Understanding the Market Shift

As cLFI/LYK prices decreased, staking rewards, which are directly dependent on cLFI issuance, were at risk of becoming disproportionately high, potentially causing the following issues:

• Over-supply of rewards, leading to further devaluation of the token.

• The incentive structure becomes skewed towards short-term extraction rather than long-term staking.

• Inflationary pressure destabilizes the overall cLFI ecosystem.

GLP Dynamic Adjustment Model

Price Drop (%)	GLP Increase (%)	Justification
10%	5%	Initial adjustment to counter minor market fluctuations.
15%	10%	Moderate price decline, requiring a higher GLP buffer.
20%	20%	Significant drop in LYK price, reinforcing staking sustainability.
25%	30%	Strengthening protocol to withstand continued downward trends.
30%	40%	Ensuring rewards remain balanced during prolonged market correction.
35%	50%	Addressing risks of excessive inflation due to further price depreciation.
40%	60%	Counteracting increased volatility and stabilizing reward output.
45%	70%	Preemptive measure to avoid excessive minting and devaluation.
50%	80%	Major market correction requiring a strong GLP increase to stabilize the model.
55%	83%	Fine-tuning equilibrium as price continues to fall.
60%	86%	Preventing hyperinflation and ensuring the sustainability of rewards.
65%	89%	Adjusting reward structure in alignment with token price stability.
70%	92%	Securing the staking model despite ongoing market downturn.
75%	95%	Continued protection against potential destabilization.
80%	98%	Last-phase measure to prevent excessive reward payouts and protect the ecosystem.
85%	101%	Regulatory buffer for extreme market conditions.
90%	104%	Final measure to prevent collapse of the reward system under extreme price drops.

How This Benefits the Community

The dynamic adjustment of GLP ensures the following outcomes:

• Sustainability: It prevents excessive inflation of cLFI tokens, keeping staking rewards balanced.

• Market Stability: It minimizes risks of token devaluation due to unsustainable reward payouts.

• Balanced Rewards: Rewards are adjusted to reflect market conditions while maintaining fairness.

• Future Growth: By stabilizing the staking model, Homnifi continues to offer an attractive and reliable platform for long-term participants.

CloudK program will continue to monitor the market and adjust the GLP as needed, based on price movements. Future adjustments will be calculated using the same methodology deriving from the base cLFI price of 2.03. All updates and adjustments will be transparently communicated to the community.