# Buying points

## In simple terms, how can I buy points?

1. Bob wants to buy points, so he buys Point Tokens from Univ3
   1. Value: Bob can now easily increase his point exposure without needing the same capital requirements
2. ⌛ (Some time passes) ⌛
3. Point issuer announces an airdrop and conversion from points to their native token
4. Rumpel converts its points for reward tokens and holds them for Point Token holders to redeem
5. Bob redeems his Point Tokens for his share of reward tokens

## What's the return?

Directional long exposure to a points program, which is a function of project quality, and its anticipated reward token.

*Note: after airdrop claiming opens up, it could take up to 48 hours for Rumpel to enable pToken redemptions.*

## What's the risk? 

* Point token volatility - You buy a point token at some price, and then it drops in value.
  * Risks that can exacerbate a Point Token’s volatility include: Point Oracle risk, Malicious Admin risk, Point Deletion Risk. [Details on each risk.](https://rumpel-docs.gitbook.io/docs/risks)
* Redemption risk - Point tokens redeem for a smaller airdrop than their offchain points
  * Risks that can exacerbate a point token's redemption risk: Airdrop Claiming risk, Airdrop Diversion risk. [Details on each risk.](https://rumpel-docs.gitbook.io/docs/risks)

## Rudimentary Pricing Model for pTokens

{% embed url="<https://www.loom.com/share/d14aa8772e9f46e29024bdd63635a9ab?sid=3e8c87a2-ad6d-431c-9309-7e349be3453b>" %}

:point\_right: [Duplicable Spreadsheet of the Rudimentary Pricing Model](https://docs.google.com/spreadsheets/d/1yUgcLvfzQ9A-LNTaZCOcwmJ8tooZ3QBpiBEW6r88dzU/edit?gid=0#gid=0) :point\_left:

## How-to-Buy-Points Guide

### Step 1: Go to the [Rumpel App](https://www.app.rumpel.xyz/?ref=EQ8W5W) & head to the Trade tab

<figure><img src="https://1867312591-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FpufmDi4GX1YNAMUXZqqn%2Fuploads%2FGYw87crWVeM36zCaBmVi%2Fimage.png?alt=media&#x26;token=e496f392-5193-42e5-b07a-dcd29dfa0b6a" alt=""><figcaption></figcaption></figure>

### Step 2: Determine pTokens current valuation&#x20;

Use Rumpel's Implied FDV widget in the table.

You'll need to source three pieces of information from the project's UI, Discord, X/Twitter, or Dune:

1. **Total points issued offchain**
2. **Point supply growth until airdrop** - could use last month's point growth and make a best guess
3. **Airdrop size** - % allocation of native token supply

Sometimes information is non-public or very hard to find. In these instances, you'll need to make a best guess.

<figure><img src="https://1867312591-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FpufmDi4GX1YNAMUXZqqn%2Fuploads%2FL4T93tfRRvtPCsbHiowr%2Fimage.png?alt=media&#x26;token=d4f43ff7-d6bb-49df-aed9-ce76791b40e8" alt=""><figcaption></figcaption></figure>

### Step 3: Determine pToken's intrinsic / future valuation

For post-TGE pTokens, ones with existing reward tokens (e.g $ENA, $ETHFI, etc), ask yourself what's the reward token price when the airdrop is expected to occur.

{% hint style="info" %}
pro-tip, you can lock in the price of the reward token by shorting via perps, so that you're only taking a bet on (1) point growth and (2) allocation (if undisclosed)
{% endhint %}

For pre-TGE pTokens, ones without existing reward tokens, ask yourself what's the lowest FDV the project's token will experience within 48 hours of their TGE.

### Step 4: Decide whether the return is worth the risk

The return = `pToken's intrinsic/future valuation`  - `pToken current valuation`

The risks that the `pToken's intrinsic/future valuation` is lower than expected:

* pToken price doesn’t rebound in the short term
* pToken redemption value underperforms
  * reward token/airdrop is priced lower than expected at TGE
  * specific pToken falls victim to one of its [mechanism risks](https://rumpel-docs.gitbook.io/docs/risks)

### Step 5: If comfortable with R/R, head to the Trade tab and click on the Actions button to link to the pToken Uniswap pool

You won't need to create a Rumpel Wallet to purchase & hold pTokens. Any EOA will do.

<figure><img src="https://1867312591-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FpufmDi4GX1YNAMUXZqqn%2Fuploads%2FshbYYhqunAi3nYrQ4nmB%2Fimage.png?alt=media&#x26;token=9656876e-758c-4eef-b953-e18252c3f487" alt=""><figcaption></figcaption></figure>

### Step 6: Buy pTokens on the Uniswap UI

<figure><img src="https://1867312591-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FpufmDi4GX1YNAMUXZqqn%2Fuploads%2FoF8AIxLogoF1idd2iI2U%2Fimage.png?alt=media&#x26;token=c0c65a55-bea0-4327-b9d7-7ed8bd9f43ed" alt=""><figcaption></figcaption></figure>

### Step 7: Sell pTokens \[for profit]

Either (A) Sell pTokens either before redemption, if the price is desirable, or (B) Hold the pTokens until pTokens become redeemable for the airdrop. Good luck.

*This document is intended solely for informational purposes regarding Rumpel Point Tokens. It does not constitute investment advice, nor does it serve as a recommendation or solicitation to engage in any investment activities. Participants should not rely on this document for accounting, legal, tax advice, or investment recommendations. The assumptions and figures presented are illustrative and intended to help participants understand Rumpel Point Token price action; they do not represent any commitments by Rumpel or its affiliates. These views are subject to change without notice.*