To the DeFi Community,

DeFi is starting to experiment with token distributions.

Whether it’s a fair launch, an initial bonding curve offering (IBCO), Balancer’s new liquidity bootstrapping pools (LBP), or the DAICO, all of these distribution models offer a novel way to get tokens into the hands of the community. While they may not be perfect, they’re all substantial improvements over the ICO model of “hey send us ETH and we’ll give you tokens”.

Perpetual Protocol became the first DeFi project to trial Balancer’s new Liquidity Bootstrapping Pools – a smart pool allowing the market to value the native tokens over time while simultaneously building liquidity on Balancer. With PERP, the token price starts at a fully diluted valuation of roughly $1B and drops in price programmatically over three days in order to mitigate initial hype and the respective volatility. That said, Balancer’s smart pool template is showing early signs of a PMF and I’m positive we’ll see more projects leveraging and optimizing the template in the future.

And while Balancer LBPs may serve as a foundational money lego for bootstrapping liquidity for the long tail of DeFi assets, the DAICO is my personal favorite that’s finally starting to see the light of day. Originally published by Vitalik, DAICOs enable users to purchase new tokens without having to trust a centralized team. Anyone can contribute ETH into a new protocol team’s ‘DAICO smart contract’ in return for protocol tokens. The caveat here is that the team is not able to withdraw the entirety of the funds at once. Instead, the amount released to the team is entirely programmatic and trustless.

Simply put, it holds the core team accountable for fundraising. It’s a new token distribution mechanism where the capital allocated to build the project isn’t controlled by a single entity, but instead by the decentralized group of tokenholders that contributed the capital. And while the DAICO hasn’t been popularized yet, Aavegotchi – an Aave NFT project – is leveraging this model for their native token, GHST. Keep an eye out on this one, it’ll be interesting to see what comes of it!

But fair launches are still the holy grail. It’s the birthplace of BTC and YFI – two crypto assets with immaculate conceptions. No founders allocation, no investors, no premine – only equal opportunity. Everyone has to play the same game to get the tokens. And while we’ve seen a handful of other projects look to mimic these fair launches, the good ones will be rare.

 

They require altruistic founders with no ulterior motive but to build better technology for the world. Those opportunities only happen once in a decade.

Don’t be fooled.

Till next week!

– Lucas


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In Other News…


Stat Box

 

  • Total Value Locked: $7.86B (down -11% from last week)
  • DeFi Market Cap: $16.2B (up +4%)
  • DEX 7 Day volume: $5.87B (down -15%)
  • DAI supply: 448.2M up +8%)
  • Total DeFi users: 443K (up +3%)

Bonus Reads


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