Last week we announced ThalaSwap, our in-house AMM focused on becoming Aptos’ liquidity hub. ThalaSwap is built around a flexible AMM architecture, enhancing yield, improving capital efficiency, and providing deeper integrations for Thala’s MOD stablecoin.
Today we want to introduce ThalaLaunch, a decentralized launchpad allowing projects seeking early-stage liquidity and enhanced token distribution a place to kickstart their communities.
How ThalaLaunch Works
Built on top of ThalaSwap, ThalaLaunch leverages a special pool type called Liquidity Bootstrapping Pools (LBPs). LBPs are a pool type that automatically changes the weights of pooled assets to produce more equitable distribution than simply creating a liquidity pool at an arbitrary price point.
Here’s a quick introduction. In an LBP, there are two assets: the quote asset (token “A”), which has a decreasing pool weight, and a distributed asset (token “B”), which has an increasing pool weight. The Token B price (so relative to Token A) is generally set higher to disincentivize market makers who have more efficient hardware and network infrastructure, as well as bots from buying much of the pool liquidity at the start of the LBP.
In most cases, unless there are considerable purchases of token “B”, the relative value of token “B” to token “A” will drop at the start. Participants can buy and sell the token freely — as long as the LBP is live — so organic price discovery can occur.
Liquidity bootstrapping pools are an effective mechanism for protocols to diversify their treasuries into reserve assets. Initial pool weight adjustments lead to steeper relative price changes than later pool weight adjustments.
LBPs are often seen as preferential to other launch mechanisms for the following reasons:
- Equitable participation: At the start of distribution, the price trajectory is downward sloping. This disincentivizes bots from taking up significant share of the pool at the beginning. Instead, all users have equal opportunity to enter the LBP depending on the price action.
- Increased distribution: LBPs are open to all users, without hidden mechanisms or whitelist processes. Without limitations or hard caps on participation, this distribution mechanism ensures increased participation and more varied distribution of token holders from the token-generation event (TGE).
- Sustainable price discovery: Without fixed valuations, protocols can gauge the fair market value of their token and facilitate greater price stability post TGE. A more sustainable price discovery ensures a healthier community-base and governance participation.
- Low Barrier of Entry: With other launch mechanisms like a lottery or “hold x token for whitelist,” an LBP allows users to diversify their holdings into project governance tokens with any arbitrary value, whether low or high. This allows these users to still get involved even with less skin in the game.
More launch mechanisms to come
An LBP, while popular, is not the only way for teams to bootstrap token distribution and community activity. ThalaLaunch has an extensive roadmap that will allow teams even more flexibility in bringing their projects to market. Some ideas that are being fleshed out and that may reach distribution include:
- Batch Auctions: Batch auctions are a different type of fair distribution mechanism that allows all participants to diversify their tokens into a newly-launched governance token at the same valuation. Batch auction are also demand based like LBPs, though settle differently to allow more equitable participation.
- Randomized Distribution: Another distribution that is “fair” but may breed more competitive behavior is a randomized, ticket-based distribution, whereby users can receive tickets for participating in a community prior to token distribution.
- Airdrop Tools: In line with Thala’s focus on building open source tooling for fellow Move developers, we plan on building tools allowing communities to airdrop tokens to their communities based on on-chain parameters.
There’s ultimately considerable design space in how protocols can bootstrap a community while maximizing participation in their governance structures. Though starting with LBPs, ThalaLaunch will eventually enable fellow Move-based projects to maximize reach bootstrapping as the Aptos DeFi and NFT ecosystem flourishes.
For protocols interested in using ThalaLaunch for a curated token offering, please contact firstname.lastname@example.org.
Stay tuned as we release more information over the coming days on our launch plan, $THL tokenomics, roadmap, and more!
Thala Labs is an organization focused on deploying innovative DeFi products on Aptos. We at Thala Labs are a group of passionate builders, researchers, and engineers with diverse experiences and expertise. Our founding contributors and advisors have both crypto-native and traditional tech backgrounds, including MakerDAO, ParaFi Capital, NEAR, Twitter, Apple, Google, and Amazon.
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