LBP: The Intelligent Mechanism of Liquidity Bootstrapping Pool

Liquidity Guidance Pool ( LBP ) is a new type of smart pool mechanism that can dynamically adjust the weight ratios of tokens in the pool over time. This mechanism can be seen as a variant of a Dutch auction, where the token price gradually decreases over time if no one makes a purchase.

Before participating in LBP, it is recommended that investors fully understand its operating mechanism and rationally purchase within a reasonable price range to avoid blindly following the trend. If there is insufficient purchasing demand, the system will adjust the pool weight according to preset rules, thereby lowering the price.

A certain project plans to release 3.5% of its total token supply through a 30-hour LBP sale from May 13, 2021, 15:00 to May 14, 21:00. This method aims to discover the true market value of the token.

The main parameters of this LBP are as follows:

• Initial investment: 3.5 million project tokens and 800,000 USDC
• Starting price: 5.49 USD/piece
• Initial weight: 48:2
• End weight:25:25
• Initial circulating market cap: $549 million
• LBP circulation ratio: <3.5%

Participants should pay attention to the following points:

1. Stay rational and avoid blindly chasing high prices.
2. Appropriately increase the slippage setting for large transactions.
3. Ensure there is enough ETH in the wallet to pay for gas fees.
4. Carefully verify the token contract address before trading.

Apart from LBP, the project also offers various participation methods:

1. Provide cross-chain stablecoin Liquidity, obtain USD-LP
2. Provide Liquidity for Token/USDT Trading Pair
3. Directly stake tokens to participate in mining

Different participation methods may bring different returns and risks, and investors should choose carefully based on their own circumstances.