bZx – a lending and margin trading protocol – distributed their native governance token BZRX via an Initial DEX Offering on Monday morning.

 

The offering kicked off roughly 30 minutes after the suggested start time, with $500k in capital being seeded to a Uniswap pool by the core team using presale investors migrated tokens. As expected, the token price absolutely skyrocketed just seconds after listing, peaking at a 12x the listing price under 60 seconds of the pool being created. Underpinning eager DeFi day-traders were a few savvy individuals who ran scripts to be the first to purchase tokens in the first block that liquidity was added.

What resulted was a few whales scooping up most of the early priced tokens, while the price of BZRX immediately spiked to $0.60/token by the time the bZx team had shared the pool via their public channels. This lead to a bunch of hot takes from the DeFi community, many of which were quick to recount how the early market makers had outsmarted the vast majority of DeFi power users.

Now, a day after the listing, BZRX is currently trading at $0.12 – or roughly double its initial listing price of just under $0.05/token. Despite this, DeFi users are up in arms since they weren’t able to make the quick buck they all expected.

Fairness vs Openness

What’s perhaps the most interesting element of this offering is the subsequent discussion of DeFi openness being a hindrance to fairness. Many were quick to suggest the bots frontrunning the offering was a major buzzkill to small fish trying to get involved, with 99% of retail users who participated more or less buying the top from a handful of whales.

What’s interesting to note is that all of the subsequent events surrounding the listing were largely out of bZx’s control. While the listing time, address, and communication was strong on their end, there’s not much that can be done once the flood gates open. What’s more is that with Initial DEX Offerings like this, the small amounts of capital seeding these pools make for rocket fuel when it comes to tokens quickly spiking in value from their initial listing price.

Many other prominent members fo the community added their two gwei to the conversation, suggesting that these offerings are a prime example of how openness (anyone being able to participate) does not correlate to fairness (everyone having an equal chance at participating).

If anything, it’s becoming increasingly clear that while many are pointing to IDO’s as the new ICO’s, they’ve got quite a long way to go before they’re conducive to their early users. Best exemplified by UMA’s Initial Uniswap Listing and tomorrow’s MTA launch, DeFi tokens are turning to fan-favorite DEXs like Uniswap and Balancer to distribute their token in a permissionless fashion.

While the premise checks out on paper, there’s no doubt this particular listing may have scared the likes of many participants as it became increasingly clear an easy flip is never guaranteed.

bZx Responds

in light of all the criticism, bZx has set the stage well for the relaunch of their V2 lending platform this Fall. For those who missed it, the whole reason behind this Initial DEX Offering was the start of the v3 token model – a well-desgined feedback loop offering rebates, governance, and yield farming.

If one thing is for sure, bZx has a long way to go before returning to its former glory from 2019. We here at DeFi Rate are wishing them nothing but the best and are eager to see if the BZRX staking model encourages usage of the protocol that can rival competitors like Compound and Aave.

If nothing else, the DeFi bull market is here and if you haven’t been paying attention – it’s time to turn the lights on!

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