First off, what are LBPs?
If you’re relatively new to DeFi, there’s a decent chance you have no idea what LBPs are.
You see, when a project launches they need to figure out the best way to get their tokens to the public. TradFi has its method figured out. It’s IPOs. Crypto however has gone through a long phase of different kinds of methods but we still haven’t landed on the golden goose, classic crypto moment.
Out of the plethora of options, one popular option was liquidity bootstrapping pools or LBPs for short. This was pioneered by DeFi OGs Balancer and was actually pretty popular a couple of years ago during DeFi summer.
The entire premise is to launch a token on an AMM without having to deal with bot manipulation, whale manipulation, and overall unfair token distribution. The main differentiator here is having control in the initial launch phase. Protocols can adjust the weighting distribution of the 2 tokens in the pool rather than having it set to the default 50/50.
This custom-weighted structure allows for a high initial price which gradually sees downward pressure until a fair price is found. It requires minimal upfront capital and the programmatic adjustment of weights allows for elongated price-discovery, which allows users to wait for their fair price as well as be less likely to fall prone to whale manipulation.
The initial understanding of LBPs is that it’s used by reputable and serious teams who are in this for the long run. Teams who genuinely care about fair distribution to their community.
So if LBPs are so good, where the hell did they go?
LBPs Fading Out
Well, there’s no problem with LBPs per se. It’s just that it’s crypto. Every week you have something completely new coming out of the woodwork and you know how crypto people are. The memory span of a goldfish and the eyesight of a gold digger as they get attracted to every new and shiny thing that they see, regardless of how good or bad they are.
There are airdrops, launchpads, fair launches, lock drops, dutch auctions, and so much more. These mechanisms often give the protocol more usage. Albeit this usage is just stat padding because the capital is usually mercenary and leaves the ecosystem. But they are new and often give people chances to make a quick buck rather than having to play the long game. Hence, people choose this route.
But the cold hard truth is that these other mechanisms are a lot more extractive than LBPs. It allows the team and other insiders to exit with ridiculously high valuations with much higher liquidity.
LBPs are fair, slow, and better in the long run, especially for smaller projects, but they aren’t exciting enough. Something that the dopamine junkies that populate this industry cannot handle.
Nonetheless, there is still some light at the end of the tunnel as there are teams that continue to stand their ground and go down the LBP route.
It’s a marathon, not a sprint.
For example, Osmosis, the leading DEX on the Cosmos blockchain started off their token distribution through an LBP. They are one of the smartest and most serious teams in DeFi. They have a genuine long-term vision which is why they are still around and continuously growing.
So now that you understand the history of LBPs and why they are better, let’s get to the meat of this article and what I assume most of you are here for. The Savvy LBP.
Savvy LBP Explained
The token being distributed will be Savvy’s native token $SVY. It is a utility token that’s used for governance, DAO membership, and incentivising liquidity providers. In addition, the Savvy treasury will keep buying back SVY tokens from the open market to aid in value accrual.
For the LBP, 500K SVY tokens (5% of the supply) will be paired with 250 ETH in a LBP.
The price will start high and keep decreasing in price based on a decay curve and remain resistant to buy pressure. That is until a fair market price is established and the curve flattens out from there on out.
The aim is to provide a more even distribution of tokens regardless of wallet size and it is also a lot more retail-friendly for any of you newer uninitiated degens out there.
Anyone can permissionlessly buy in and sell out of the LBP at any time of their choosing. No need to lock up funds, and no strings attached.
Moreover, all the participants will receive a poolside NFT. Once the LBP is complete, they can go to the Galxe portal and claim their NFT.
Once this entire LBP phase is done, the SVY/ETH pool will be live on TraderJoe on Arbitrum and will then trade like any normal coin in the market. Except this time there won’t be any of those manipulative swings in prices since the initial distribution was fair. It will allow for more efficient and elongated price discovery.
All of this will be taking place on Fjord Foundry, the best place to launch your tokens through an LBP.
If you are interested in taking part in the Savvy LBP or even just nosey and want to see what’s happening over there you can head there using this link. Enjoy, degens…
Disclosure: The blocmates core team have participated in the Savvy LBP.