MinSwap liquidity bootstrapping, launch, and yield farming
Minswap DEX launched on Cardano's mainnet on March 8th. It is the most popular DEX on Cardano by TVL. 4th to launch after MuesliSwap, SundaeSwap, and AdaxPro.
On Feb 23rd the DEX launched a liquidity bootstrapping event (LBE) for the ADA/MIN pool.
MinSwap LBE phases
The Minswap LBE event took 3 phases. These are the dates:
The first phase allocated 2% of MIN tokens of MinSwap's total token supply i.e 5 Billion MIN tokens. As such they allocated 100 Million MIN tokens towards the LBE event.
|1st||Discovery Phase||buy purrADA tokens||February 23rd to March 4th|
|2nd||The Encounter Phase||Exchange purrADA for LP tokens||March 4th to March 13th|
|~||Mainnet Launch||Minswap launches on Cardano mainnet||March 8th|
|3rd||Settlement Phase||stake LP tokens to earn MIN, via yield farming||March 14th onwards|
Discovery Phase (1st Phase)
During this phase, participants supplied ADA to the DEX in exchange for purrADA tokens at 1:1 ratio i.e 1 ADA equals 1 purrADA. This ADA supply naturally set MIN/ADA price at 0.2518 ADA per MinSwap token.
MinSwap DEX supports Minwallet, Typhon, Nami, Flint, Eternl (previously CCvault) & Gero wallets. It doesn't work with Yoroi. Single address mode is required for _Eternl wallets.
Encounter Phase (2nd Phase)
During this stage, purrADA holders exchanged their purrADA tokens for MIN/ADA LP tokens at a fixed rate i.e 0.2518 ADA per MIN token. LBE participants received a 110% to 200% bonus during the first week of yield farming.
Update: On 28th of February, Minswap announced that they would allocate 1 Million $MIN tokens to the MIN/ADA pool daily during the first week of yield farming.
Settlement Phase (3rd Phase)
MIN/ADA LP tokens holders staked their LP tokens in a yield farming pool to earn MIN tokens. For an example of how would look like, see MinSwap's breakdown here
What did MinSwap achieve through the liquidity bootstrapping event?
A fair and transparent MIN/ADA price discovery process.
The MIN/ADA pair price was determined by the process (market forces) and not the MinSwap team.
All ADA owners had the opportunity to acquire MIN tokens at equal footing.
Minswap significantly evaded long queues and congestion.
Congestion like the ones experienced initially on SundaeSwap DEX as people raced to benefit from SUNDAE/ADA, LQ/ADA, & WMT/ADA pools. These pools were the only ones that people could yield farm SUNDAE tokens on.
MinSwap sidestepped this problem by eliminating that sort of incentive entirely.
Eliminated the possibility of clever ADA holders submitting an order before the DEX launches.
This scenario played itself out during SundaeSwap's launch. An individual who understood how SundaeSwap's protocol works, successfully submitted a large order right before the DEX launched. That individual obviously got his order fulfilled first at a very low price.
In spite of these precautions, the MinSwap team acknowledged that there were risks to the process:
Possible price volatility
Unforeseen security loopholes.
Of course, the team took precautions. The MinSwap DEX was successfully audited by Tweag for security by Feb 11th.
2/ The MinSwap team locked a significant quantity of LP tokens in a 6 months contract.
Wingriders DEX team helped MinSwap a bug that would have been exploited to drain all liquidity on MinSwap. This was a few days after the LBE close.
MinSwap fixed the bug and underwent additional audits.
MinSwap is the first DEX to apply this liquidity bootstrapping approach on the Cardano chain. Being first often comes with unforeseen tradeoffs.
MinSwap has the best UI among Cardano DEXs
MinSwap was on the testnet since January 26th. From our experience, it has a stellar user interface (UI). The User experience on it is also hard to rival. In a lot of ways, its UI arguably better than SundaeSwap and Wingriders.
For context, before the mainnet launch the team posted a teaser here, flaunting the MinSwap DEX fluid UI working on mobile via minWallet. That UI is really sleek.
Unlike AdaxPro, it's the only DEX that we thought can rival SundaeSwap in the short term and midterm. That prediction is of course if it successfully onboards sufficient liquidity. In a short while, MinSwap climbed to the top and kept the position for months.
Before MinSwap, SundaeSwap (which we equally champion) dominates Cardano TVL by over 95% (rounded down). MinSwap attracted enough LBE liquidity that helped topple SundaeSwap's TVL dominance.
This competition has helped the Cardano DEX ecosystem flourish.
DefiLlama lists Minswap TVL under Cardano chain
- On March 2nd, MinSwap was listed under Cardano's chain TVL on DefiLlama. MinSwap now holds the second position after Wingriders.
MinSwap discovery phase ends
During its LBE discovery phase MinSwap DEX locked in 50.36 million in ADA, setting the MIN/ADA price at 0.2518.
Total value locked on Minswap LBE page by 2:00 AM EST, March 5th, 2022
50.36 ADA TVL places minswap squarely as the second horse against SundaeSwap as we predicted here. At the same time, it would propel TVL on the Cardano chain from the current 140 million to over 150 million USD. Again, that is overall progress for the ADA ecosystem.
MinSwap announces interim yield farms allocations
MinSwap allocated 2,000,000 million MIN tokens daily during the first month to yield farmers.
|Yield Farm||MIN rewards daily||Pools|
|🐯||Tiger Farm||140,000||PAVIA/ADA, LQ/ADA, MELD/ADA, WMT/ADA, DANA/ADA|
|🐱||Kitty Farm||60,000||AADA/ADA, CLAP/ADA, VYFI/ADA|
Note: After the first week of yield farming (i.e after March 21st), these allocations changed.
Minswap also has double yields farms e.g ADA/cNETA & HOSKY/ADA. This way a user staking their cNETA/ADA LPs earn both cNETA & MIN tokens.
MinSwap has a governance forums on discord and discourse collects proposals / idea on liquidity pairs structuring. This community i.e kitty farmer committee makes decisions on what pool pairs will be yield farms. In a lot of ways, the foundations of MinSwap DAO have been created.
MinSwap's LBE Encounter phase starts
LBE participants redeemed the purrADA they acquired during the discovery phase for MIN/ADA LP tokens.
After redeeming, the wallet used to acquire the purrADA received the LP tokens, 2.5 and a Minswap Meteor Liquidity Bootstrapping Event NFT. This NFT was wallet_specific and, therefore, wasn't for sale. It was used to reward LBE participants. MinSwap's team clarified this detail via a tweet:
We noticed that some LBE participants are listing/selling their NFTs received with their MIN/ADA LPs. 👉 The LBE NFTs will be used to boost Yield Farming Rewards and it's tied to the wallet (non-transferrable). Do not sell them! ~ MinSwapLabs twitter
MinSwap DEX launches live on mainnet
On the night of March 8th eastern time, MinSwap deployed on Cardano's mainnet. Just like on its testnet, the DEX rolled out an unrivaled UI.
MinSwap has a zap function that allows a person to provide liquidity with only one asset out of a pair. Zapping might affect slippage but it makes reduces the number of steps needed while providing liquidity.
MinSwap now has over 37.12 million USD of TVL. This represents about 26% of TVL on the cardano chain, second to Wingriders $ 49.99 million i.e 36%.
First published on Feb 21, 2022