The Right Way To Launch Your Crypto Project: LBP vs. FTO vs. Regular Launchpad Model

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As a seasoned analyst with years of experience navigating the cryptosphere, I’ve witnessed the ebb and flow of countless projects. The role of launchpads in this dynamic ecosystem cannot be overstated – they serve as the crucial stepping stones for new projects, connecting them with investors and providing essential resources like fundraising and community building.

As an analyst, I can attest that launchpads remain instrumental in the dynamic world of cryptocurrencies, serving as critical stepping stones for budding projects and token-driven economies. They provide these ventures with their initial momentum, connecting them to potential investors who could help bring their ideas to life.

To ensure a successful takeoff for new cryptocurrency projects, it’s crucial to select the appropriate launch platform. However, one obstacle lies in the scarcity of substantial liquidity. Traditional launch platforms often rely on locked liquidity with limited rewards for ongoing investment, causing early investors to rush to withdraw their funds, potentially leading to a rug pull. The ideal solution is to convert locked liquidity into supplied liquidity by motivating community members to contribute to the liquidity pool through attractive incentives.

Let’s explore the existing launchpad models new projects can choose from:

Typical Launch Platforms: Typical launch platforms essentially act as a bridge between project creators and potential financiers. These platforms facilitate the funding of up-and-coming cryptocurrency projects through Initial Dex Offerings (IDOs) or Initial Coin Offerings (ICOs), primarily from early backers or investors. They operate under a locked liquidity system, where initial investors must keep their token holdings secure until the Token Generation Event (TGE). However, this often results in a large-scale selling spree by early investors immediately following the TGE due to a perceived lack of long-term value distribution. Consequently, problems such as insufficient liquidity or rug pulls may arise.

Liquidity Bootstrapping Pools (LBPs): In the world of DeFi, LBPs are utilized for the introduction and pricing determination of newly issued tokens. A type of Automated Market Makers (AMMs), LBPs enable projects to debut their tokens with minimal starting liquidity, addressing some common problems in traditional token releases like front-running and price manipulation. They are frequently chosen by projects dealing with capital limitations.

Despite being simpler for some users to understand, Liquidity Boosting Pools (LBPs) can be more intricate than standard liquidity pools or launch methods due to their dynamic weight mechanism, which can cause perplexity among typical participants. This confusion frequently results in hesitation when it comes to user participation. Moreover, they are susceptible to price floor risk, meaning the token’s value could dramatically decrease if demand suddenly drops. Lastly, LBPs struggle to make advancements regarding liquidity fragmentation.

Fair Token Offering (FTO): Proposed by Honeypot Finance, the FTO system swaps locked liquidity for provided liquidity. This model addresses shortcomings that other models have missed out on: liquidity dispersal, absence of long-term value distribution, and fair token pricing. By supplying liquidity via Honeypot Finance’s FTO system, participants instantly make new tokens tradeable on HenloDEX from the get-go.

As a researcher, I can share that in this system, I (we) grant LP tokens in exchange for contributions. The FairTrade Offering (FTO) model is designed to establish a balanced environment for liquidity providers and project developers. The LP tokens are apportioned equally between the two parties, with each receiving 50%. This equitable distribution strategy fosters sustainable value distribution and facilitates effortless scaling. By doing this, we mitigate the possibility of one party gaining an unfair advantage, ensuring fair pricing is maintained throughout the system.

It’s quite distinct how FTO (First-to-Offer) stands apart from the other two models. The advantages of utilizing FTO become evident when you consider the following points:

100% Initial Token Pooling: The Functional Token Offering (FTO) system guarantees that all the tokens are available in the pool during the initial release, thereby preventing potential market manipulation.

Creating LP Tokens: Rather than purchasing the actual tokens directly, investors acquire LP (Liquidity Provider) tokens during the launch phase. This action establishes functioning markets immediately.

Balanced Reward System: In my analysis, I ensure that both the protocol and its participants receive equal treatment when it comes to rewards. This is achieved by distributing LP tokens evenly, with 50% allocated to each side, thereby eliminating any potential advantage for either party and maintaining a fair system.

Fundraising through LP Token Sales without Affecting Token Value: According to the rules, these protocols can offload their LP tokens to gather funds for various operational needs. Importantly, these sales do not influence the value of the associated tokens.

The ability of FTO to facilitate a fair and transparent launch is enhanced by Custom Hook, another outstanding feature of Honeypot Finance. Dreampad Custom Hook:

  1. Expands the range of assets that can be launched through FTO
  2. Enforces increased flexibility to accommodate various project requirements and investor demands.

Dreampad is powered by three different hooks:

Gradual Release Mechanism for Liquidity Providers: This mechanism enables projects to gradually distribute a portion of the Liquidity Provider’s share over a set period, following a predetermined release timeline.

Function for Removing & Incinerating Liquidity Tie: This feature can be utilized by various projects on different occasions. For instance, it allows for the destruction of tokens, thus withdrawing liquidity from the pool, which in turn boosts the purchasing power of the token.

Future Option Hook Overview: This Future Option Hook serves three primary functions:

Just as Uniswap V4’s unique hook has raised the bar for decentralized trading platforms, Dreampad’s custom hook seeks to reshape expectations for future launch strategies.

But how can new projects decide on which model is right for them?

Factors To Consider While Choosing A Launchpad

Choose a Launch Platform: Pick a platform that suits your project’s development stage. Projects at an early stage might find value in platforms that provide robust community backing and strategic alliances.

Assessing Liquidity Stability: Examine the launchpad’s capacity to generate or obtain initial market liquidity, and subsequently maintain it over a prolonged period, to safeguard the project’s standing. It is crucial that there is sufficient liquidity available to reduce price fluctuations and build user confidence.

Sustained Benefit: Opt for a platform that fosters long-term success by offering post-deployment assistance such as marketing, consultancy, and ongoing access to resources for liquidity.

Ensuring Fairness in Pricing: After the Token Generation Event (TGE), it’s crucial to maintain fairness among all stakeholders to prevent any potential manipulation. This means that pricing should be set in a way that no single party has an undue advantage over others.

Dreampad public testnet is already live, with 2000+ successful launches in just two weeks. The network has already facilitated 20k+ swaps with the thpot holder count exceeding 300k. The testnet is open to anyone and everyone seeking to launch a token with 100% liquidity from day 1. 

Final Word

Traditional launchpads often struggle to maintain continuous liquidity for new projects, resulting in biased pricing and a tarnished image. In contrast, LBPs excel at providing ample liquidity, but may lack incentives and efficient methods to encourage prolonged user involvement, which could also lead to unfair pricing. This is where FTO stands out as the obvious choice. It boasts an effective LP distribution system that ensures a fair environment for both early adopters and project creators.

Essential Point: Developers can access half of the LP tokens for funding expansion, which doesn’t impact token price. Plus, the flywheel model ensures projects launched via FTO generate a fully liquid market from the get-go, effectively addressing liquidity fragmentation. Still unsure? Let me explain more about FTO:

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2024-08-28 16:38