How to add actual Ether to custom token

Question

I built a token by creating a smart contract for it, and have successfully connected to it, which is on a Ethereum test-net. Using web3.js I have been able to send token from one account to another account, score! However, I'm having a hard time finding a tutorial on how to add Ether to your token, to give it an actual monetary value. From what I understand, part of the beauty of creating tokens on a decentralized P2P ledger network otherwise known as a blockchain, is that it gives you a secure way to transact any infinite number of abstract things. But how do you give those tokens actual value? Do you tie some amount of Ether to your token, and state in your smart contract how much ether one of your tokens is worth?

Or do you explicitly set your smart contract up to pull ether from an account automatically when they send token from their wallet to another wallet? In either case how do you accomplish that? I have seen that some functions have payable on them, and this may be the key to what I need. Could anyone help me out?

Answer 1

Price discovery depends on the value (access, assets, earnings, future value) represented or attainable by owning one the tokens.

The simplest example I know about is a simple contract that exchanges tokens for ether at a fixed rate, and offers to buy them back with the ether collected at sale time. The tokens are placed into the custody of the sale contract. The collected ether stays in the sale contract because it will be needed if and when people want to redeem their tokens for ether.

This simple arrangement is, admittedly, uninteresting on a lot of levels. It's a good starting point for thinking about the value that "backs" the proposed token.

Tether is essentially like the example, except they (claim) they back it with US Dollars which are beyond the reach of a smart contract. Generally speaking, USDT can hold a peg to the USD as long as Tether can maintain confidence that those tokens are redeemable. This naturally means people want to see that actually have the USD they say they have and they will redeem it without friction. The peg will not hold to the extend that doubts emerge.

Hope it helps.