Pricing Mechanism

The pricing mechanisms in Exxa Funds are designed to provide accurate and real-time valuations of the assets within each index.

These mechanisms leverage decentralized oracles, liquidity pool integrations, and advanced algorithms to calculate Net Asset Value (NAV) and unit prices for each fund.

This ensures that users always have access to reliable pricing data when investing, redeeming, or trading fund units.

The calculation of a fund’s NAV involves summing the market values of all constituent assets and dividing by the total number of fund units. Mathematically, this can be expressed as:

$$NAV per Unit ={\textstyle\sum_{i=1}^n (P_i *Q_i) \above{1pt} U}$$

Where:

• Pi = Current price of the i-th asset in the fund

• Qi ​= Quantity of the i-th asset in the fund

• n = Total number of assets in the fund

• U = Total number of outstanding fund units (shares)

This formula calculates the Net Asset Value (NAV) per unit, which represents the fair value of one unit of the fund based on the current prices and quantities of all assets.

Real-time price updates are provided through oracle integrations, such as Chainlink, which aggregate data from multiple exchanges to minimize discrepancies and price manipulation risks.

Exxa employs a price smoothing mechanism to mitigate the impact of short-term volatility. This is done by calculating a Weighted Average Price (WAP) over a specified time period to ensure more stable fund valuations, especially during periods of market turbulence. The formula for the Weighted Average Price is:

$$WAP_i ={\textstyle\sum_{t=1}^T (P_{i,t} *V_t) \above{1pt} \textstyle\sum_{t=1}^T V_t}$$

Where:

• Pi,t = Price of the i-th asset at time t

• Vt​ = Volume of transactions or liquidity at time t (or a weight factor)

• T = Time window (24hrs) over which the average price is calculated

The WAP calculation aggregates prices over a specified period, adjusting for transaction volume or liquidity at each time point, helping smooth out sharp price fluctuations and minimize volatility.

This ensures a more stable valuation of the fund and enhances the overall user experience.

In the case of low-liquidity assets, Exxa incorporates slippage-adjusted pricing to account for market depth and reduce the impact of large trades on the fund’s valuation.

By combining these robust pricing methods, Exxa ensures transparency, accuracy, and trust for all participants in the Exxa ecosystem.