[Discussion] LBP Details and Parameters

To move forward GuruDAO needs a treasury to manage, and build all the wonderful things members can propose. And step one is ensuring that the treasury gets filled. There are a few options when it comes to bootstrapping token liquidity but a recent poll by 0xMaki shows the web3 community prefers Balancer LBP (Liquidity Bootstrap Pool) as the most fair, effective & best usability for participants.

0xMaki_🦇🔊_on_Twitter___Sentiment_Check__Bootstrapping_liquidity_via_token_sale__what_is_the_most_fair__effective___best_usability_for_the_participants_____Twitter

With a Balancer LBP, the pool is able to dynamically change the weighting of the token pair over a certain period of time. With the majority of pools requiring a 50/50 split from token A/B, the dynamic Balancer LBP has advantages. The first being that the sell pressure from the change in weighting creates a generally agreed upon market price. On top of that, since the LBP starts with a high price, it disincentivizes bots and whales from snatching up all the liquidity from the beginning. Finally, the starting capital can be small, saving upfront costs.

What’s great about LBP for GuruDAO?

  • Fair launch for humans.
  • Better price discovery.
  • Permissionless and scalable.

In order to set up a LBP launch, GuruDAO needs to set the details and parameters:

  • Start Date:
  • End Date:
  • Duration:
  • Starting Price:
  • Ending price:
  • Minimum purchase amount:
  • Blockchain: Ethereum
  • Initial pooled: ____ GURU : _____ WETH
  • Starting weights: GURU 95%: WETH 5%
  • Ending weights: GURU 50%: WETH 50%

100% of funds raised during the LBP will be set aside and DAO governed. Using protocol-owned liquidity, GuruDAO will be able to build liquidity on-chain using the native token, $GURU. The DAO also earns trading fees from this liquidity pool that benefits the DAO and token holders.

For reference we can explore previous LBPs on Copper platform:
https://copperlaunch.com/

What is LBP?

A few good articles here for those who aren’t familiar with this token distribution mechanism:

There is a great in-depth youtube video about LBP:

But we are selling voting power to the whales!! OMG!!

We are not. Please read and understand how veToken model works. Liquid GURU token doesn’t have voting rights at all. You have to lock GURU token into a vote escrow smart contract to participate in governance.

What’s next?

Let’s think about LBP parameters for the GuruDAO liquidity bootstrap event. How much liquidity do we need for the start? What would be Starting price and Ending price?

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in this model of selling token we are selling 20-30 % of token and if we will have low demands, it can bring some issues about controlling large amount of token in some hands.

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It’s up for discussion what amount of tokens we want to sell and rest of LBP parameters. Nothing is set in stone yet.

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I followed the Vesta Finance launch on Copper and I noticed something strange. The LBP ended at $2.85 on 4 Feb.

However, when they finally airdropped, the price went up to almost $6! And stayed above $3 until the 18th. Then why didn’t these guys buy at the LBP? It would have led to better price discovery and the project would have gotten more money.

Did not understand it. Anyway… just something I noticed. Does not mean I have any issues with the approach

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yes, there are some similar projects that used this model of selling:
for instance RSS3 token:
https://copperlaunch.com/pools/0x02B67E19EEC23c4EF40F95735Aa522F63C254Cd8
image
or xy finance token:

and there are also some unsuccessful projects that used this model:
like alphaPLAYER token
in this token sale, there wouldn’t be enough liquidity to buy tokens in LBP and you can see how the price dropped.

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Are anyone can tell us the recent Liquidity Bootstrap Pool that success gain so much funding? how much they gained? i think its a good to know them before we doing our campaign

I honestly think it would be best that the team organises and sets the parameters for the LBP, as they are the one’s who are going to have the most accurate idea of how much money the treasury will need to fund themselves and future projects.

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Do LBP, I hope to consider their own needs while ensuring the market value of the token, how to get a good price in LBP, from the example of thinking lbP development is not very good, if you use LBP then I hope Guru is the most successful. Come on, though it can’t help you. But I hope Guru is the best.

you can check it on Copper

There is no such thing as a “core team”, or “developers” to take this kind of decision for the DAO. We are the DAO where everyone is a contributor. If DAO wants something - DAO should do something to make it happen. In other words, DAO is everyone’s responsibility, and if we fail as a DAO, we can’t blame anyone except ourselves.

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Some thoughts on liquidity from this article:

Finding a liquidity cap target is as simple as determining the smallest permissible trade size for larger investors and ensuring the pool has sufficient liquidity to support it within a 2 % slippage range.

![](data:image/svg+xml,%3csvg%20xmlns=%27http://www.w3.org/2000/svg%27%20version=%271.1%27%20width=%271054%27%20height=%27562%27/%3e)

Liquid cap target

One way to think about a liquidity cap target is to consider liquidity depth in relation to market capitalization.Determine which market cap category the project belongs to and use the lower bound of the nominal trade sizes as a guideline.Calculate how much liquidity is required to facilitate those trade sizes for various levels of slippage using this equation/spreadsheet.

![](data:image/svg+xml,%3csvg%20xmlns=%27http://www.w3.org/2000/svg%27%20version=%271.1%27%20width=%271050%27%20height=%271072%27/%3e)

Liquidity depth

Example: I’m the founder of a $50 million project with a low-mid market cap. At most, I’d like to let large investors to trade 0.1% to 0.3% of my protocol at a 2% slippage rate. This leads to trade volumes ranging from $50,000 to $150,000 (50m * 0.1% and 50m * 0.3%). According to the spreadsheet’s logic, a $5 million pool (50/50 weight) can accommodate $50k trade sizes with 2% slippage. This means I don’t need more than $5 million in my pool to accommodate huge investors, and I just need $2.5 million in my own token and $2.5 million in USDC/ETH in the pool.

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Why such a limit?
And how much is dex.guru now valued? 50mln?

In fact, these 2 assumptions provide the basis for making a decision on the liquidity pool, and hence, in the future, determining the price of the token. Right?

That’s a quote from this article Laundry list of Tokenomics — Chetan Bangalore

The last VC round was at $50M valuation, there is no liquid market to find out exact current valuation. We probably can do some research prior to TGE and try to see what a fair valuation should look like.

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