Liquidity Bootstrapping Pools (LBPs) - For LBP Hosts
LIQUIDITY BOOTSTRAPPING POOLS - FOR LBP PARTICIPANTS
Kovan Testnet
Copper Links
Alchemist Incubator
FAQs
1. How should I choose a starting price?
You can think of the starting price of your LBP as the ceiling you’d want to set for the token. This may seem counterintuitive, but since LBPs work differently than other token liquidity platforms, your starting price should be set much higher than what you believe is the fair price.
This does not mean you’re trying to sell the token above what it’s worth. Setting a high starting price allows the changing LBP weights to make their full impact, lowering the price progressively until a market equilibrium is reached. Unlike older token sale models such as bonding curves, LBP buyers are disincentivized to buy early, and instead benefit from waiting for the price to decrease until it reaches a level they believe is fair.
For example, if you believe the fair price for your token is $1, you may want to consider an opening price that is up to $10.
2. What's the difference between a batch auction and a LBP?
In batch auctions, a set amount of tokens are divided amongst individuals according to their contribution size. Nice and even across time, but this approach has its faults. It’s prone to be co-opted by whales, and can encourage botting or front-running to accumulate a large share
LBPs start at a high price (probably more than you’d want to pay) and decrease according to a negative exponential curve. The price also moves when people buy in -- the more people buy, the higher the price goes.
So if the decay curve is giving you too high a price, you can just wait for it to go down. But don’t wait too long or other people might drive the price back up. See below for an example chart:
Using an LBP has several advantages over a batch auction. It allows the purchaser to know exactly how many tokens they will get for their money.
It gives the purchaser more flexibility to get in at a price point that works for them. And it gives the token itself more integrity, as the price can reach a natural floor where demand matches the decay curve.
3. How does Copper's platform access charge work?
There are two platform access fee components for Copper LBPs.
The first is a swap fee that is set and collected by the project. This fee serves the purpose to discourage bots and traders from manipulating a LBP and ideally enables greater token distribution to community members. The typical range we have seen implemented by projects is between 1%-3%, and this fee is collected live during a LBP by the project team in both their main token (a user sells the main token into the LBP) as well as in the base token (a user buys the native token).
The swap fee is automatically added to base tokens accrued and is withdrawn in one transaction at the conclusion of the LBP. There is no separate withdrawal of swap fees accrued throughout the course of the LBP. Balancer Pools automatically compound any swap fees earned to the balances inside of the pool. The base tokens earned via swaps would be added to the final collateral balance and main tokens earned would go to the final main token balance.
The second fee is a platform access charge that is applied by Copper at the conclusion of a LBP on total base tokens accrued. Base tokens accrued is inclusive of base tokens accrued + any swap fee. The platform access fee is a flat percentage fee that is automatically transferred to Copper at the conclusion of a LBP.
4. Does Copper support Know Your Customer (KYC)?
Copper supports KYC LBPs by configuring the UI, but the KYC requirements are conducted externally to Copper. Previous KYC LBPs on Copper conducted KYC by modifying their token contract to only allow whitelisted wallets to participate in the LBP, and worked with a third party KYC vendor to complete compliance requirements.
If your project has a different method to conduct KYC for an LBP please reach out to the Copper team to discuss feasibility.