An Analysis of CPMM Liquidity Pool Dynamics for Employee Liquidation Programs
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Date
2023-05
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The Ohio State University
Abstract
Employee stock options and equity compensation programs are commonly used methods for incentivizing employees to stay with a company and align their interests with those of the company. However, when it comes time for employees to exercise their options or sell their equity, liquidity can often be an issue. Traditional markets can be illiquid, leading to long wait times for employees and potentially unfavorable pricing. In this paper, we explore the potential use of liquidity pools to address this issue. By creating a liquidity pool for a company's equity, employees can access a more liquid market and potentially achieve more favorable pricing. We propose two algorithms for implementing such liquidity pools and discuss the next steps for testing and implementation, including methods for initializing the transition probability matrix. This paper highlights the potential benefits of liquidity pools for employee liquidation programs and provides a framework for further research in this area.
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Keywords
Blockchain, Markov Arrival Process, ICO, Crypto, Liquidity