Minswaps extends its LBE approach other Cardano projects
Minswap DEX has introduced a Launch Bowl utility that will help other Cardano projects bootstrap liquidity onto their platforms. MinSwap's LBE event was a massive success.
LBE benefits over traditional liquidity methods
After MinSwaps LBE's success, the process has been touted as one of the DEX's strengths. Here are some of the advantages of using an LBE to court liquidity.
LBE helps thwart whale and bots manipulation
Token prices are determined at the tail end of the LBE discovery phase. Additionally, a 25% withdrawal fee is charged during the last 2 days of that phase.
Note: the 25% penalty fee remains in the liquidity pool.
These features of LBEs make it difficult for bots, project insiders, or tech-savvy whales to game the token launch. Usually, they will place massive orders before or within seconds of the token/project launch. Such orders process at comparatively low buy prices. After other retail users have bought the tokens, these whales then dump the tokens on the market at higher prices.
The equivalent practice to this behavior is insider trading. A process that almost always hurts normal retail prices by diluting their tokens prices.
Due to the aforementioned safeguards, the whales can neither skip in line ahead of other users nor can they manipulate the price before the event completes.
Fair price discovery
An LBE uses free market dynamics to determine the price of a token. Since LBE was introduced by MinSwap, ADA has been used as the base asset against which the price of a token is determined.
Users provided their ADA to an LBE liquidity pool. In the case of MinSwap LBE, that pair was MIN/ADA. In the case of future LBEs, if a project's token is X, the pair will be X/ADA.
When a user provides their ADA for the first time, half of the ADA they provided is converted into the pair LPs. They receive the customADA (e.g purrADA, mcosADA, or xADA) as proof of their transaction.
The customADA is then used to redeem LP tokens and a special NFT(s) in the next phase. The NFT(s) are sometimes wallet-specific and is used later for boosted yield farming.
At the end of the discovery phase, the ratio of ADA and customADA in the pool determines the price.
LBE promotes a wider distribution of a token
The requirement to participate in an LBE is a loaded ADA wallet. Users can provide any amount of ADA into the pool i.e there's no minimum amount of ADA required to participate.
Assuming that there is adequate awareness about a project, chances are that more ADA holders will participate. The wider the distribution of a token, the better chance that it will be decentralized. Of course, assuming that the tokenomics are sound.
MoCossi planet will use Minswap Launch Bowl
Already, MinSwap has partnered with Mocossi planet as the first DeFi project to conduct their LBE on the DEX's launch bowl. This LBE is scheduled for mid-July. Interested users will have the opportunity to provide liquidity to Mocossi's MCOS/ADA pair. 2% of MCOS' total supply will be used for this event.
Mocossi's LBE will consist of 2 phases, unlike Minswap's which had 3 phases. For Mocossi, the phases will be:
Price discovery phase
It will take 10 days from launch. During the first 8 days, users can provide ADA for mcosADA and optionally redeem their mcosADA for ADA. Withdrawing __mcosADA on days 9 and 10 will attract the aforementioned 25% penalty.
mcosADA holders can redeem their holdings for MCOS/ADA LPs equivalent to their share of the pool. Unlike Minswap's MIN/ADA LBE, which required users to convert their purrADA in 14 days, mcosADA holders can convert at leisure.
Incentives to participate in Micossi LBE
Participants in this LBE will receive a functional NFT and a PvP NFT.
Access to exclusive yield farming pools
Using the functional NFT, users will access exclusive farm pools that will feature higher APRs and triple farm tokens. Minswap will run these pools. This NFT will contain a record of the LBE LPs amount.
This way, the NFT will serve both as a key to the exclusive farm pools and a scale of how many LPs a user can stake in the pool.
Functional NFT will be tradeable
This functional NFT will be wallet independent hence transferrable. However, if a wallet contains multiple LBE functional NFTs, only the NFT with the highest value will be used.
LBE participants who don't want to participate in yield farming can sell their NFT to willing buyers at a good bargain.
Future utility for the PvP phase
Like with other NFTs, the PvP (Player vs player) NFT could be used for future in-game utility. Which is exchangeable for real-world value, of course.
First published on Jul 14, 2022