This year’s bull run has officially begun and with it, many projects are coming to market to take advantage of the momentum and the Bitcoin Halving event. As a Crypto Market Maker, the number one concern many projects have is liquidity when it comes to listings and launching their token. Launching your project into the market and your community is stressful enough without having to worry about liquidity or price discovery.  

At Artis, we believe we are unique in providing LBPs as a service whether it’s just for your launch or as a market making client for the longer term.  Liquidity Bootstrapping Pools not only facilitates a smoother entry for new tokens to market but also ensures sustainable liquidity from the get-go. This article delves into the essence of LBPs, their benefits, and Artis success stories using successful LBPs in 2024.

What Are Liquidity Bootstrapping Pools?

At its core, a Liquidity Bootstrapping Pool (LBP) is a type of decentralized finance (DeFi) mechanism designed to help projects acquire initial liquidity for their new tokens in an efficient and fair manner. Unlike traditional liquidity pools that require equal value of two tokens to be locked up, LBPs allow projects to start with a higher weight of their own token versus the paired stablecoin or cryptocurrency. This unique feature helps mitigate the initial price volatility typically associated with token launches.

LBPs offer several benefits for projects taking their token to market: 

• Fair Price Discovery: The dynamic rebalancing mechanism of LBPs allows for a more democratic and gradual price discovery process. As the weight of the project's token decreases over time, the price becomes more reflective of actual market demand, reducing the impact of early price manipulation or speculative dumps.
• Minimized Initial Capital Requirement: Projects can initiate an LBP with a relatively lower amount of capital since they don't need to lock up a large amount of liquidity in a 50/50 ratio. This is particularly beneficial for startups and smaller projects with limited resources.
• Wider Participation: By setting a longer duration for the LBP and allowing the price to start high and gradually decrease, projects can encourage wider participation from the community. This prevents the dominance of whales and/or larger players, ensuring a more equitable distribution of tokens.

Enhances Market Liquidity; Reduces Market Manipulation

From the moment of launch, LBPs help in establishing market liquidity. By enabling projects to set the initial conditions (such as duration and price curves), LBPs facilitate the accumulation of a liquidity pool that supports both the project’s token and its trading partners. This instant liquidity creation is crucial for the token’s usability and value stability.

The structure of LBPs naturally deters price manipulation at the time of launch. Since the token's price is designed to decrease over the LBP duration, it discourages initial overpurchasing and subsequent dumps, leading to a more stable market entry.

The declining price mechanism of an LBP encourages participants who believe in the long-term potential of the project to wait and buy the token at a more favourable long-term price. This strategy helps to reward supporters and users who are not just looking for quick profits but are genuinely interested in supporting the project's long term success.

By enabling better price discovery, reducing initial capital requirements, and fostering a healthier, more stable liquidity environment from the outset, LBPs have become an invaluable tool for projects seeking to make a successful entry into this bull market. 

Each LBP at Artis is bespoke and built for the project, their token metrics and their liquidity goals.  Here are the stats for a few of the projects we have launched LBPs for recently:

• Befi Labs LBP: Raised $8.02M with 2,554 participants

• Tuna Chain LBP: Raised $8.92M with 1,595 participants

• Shutter DAO LBP raised $8.31M with 1,996 participants

We also care about the ‘little guy’ and work with a number of smaller projects to support their LBPs. Many of these are under NDA; the most recent project raised ~$600K with ~200 participants.

At Artis, we believe we are the only crypto market maker offering LBPs in the current market.  But instead of taking our word for it, this is a testimonial from the leading LBP curator on Fjord Foundry:

“Bonsai is excited to partner with Artis as our preferred market-making firm for several compelling reasons. Artis has consistently demonstrated an unparalleled level of expertise, integrity, and responsiveness in its dealings with Bonsai and our portfolio companies. Their deep understanding of market dynamics, coupled with their strategic insights, has been instrumental in supporting our portfolio companies with their market making needs.”

“Moreover, Artis's unwavering commitment to integrity ensures that all transactions are conducted with the highest ethical standards, fostering a relationship built on trust and reliability. Additionally, their proactive and responsive approach to client needs ensures that Bonsai’s portfolio companies receive the attention and support necessary to navigate the complexities of the market effectively. Overall, Artis's exceptional track record, combined with their dedication to excellence, makes them an indispensable partner for Bonsai.”

We are grateful for awesome partners like Bonsai who stand by us in achieving best possible outcomes through the LBP process. 

At Artis, our deep understanding of market making lies at the heart of our trading and liquidity strategies. We believe by bootstrapping liquidity, enhancing market depth, and skillfully exploiting market opportunities, we can maximise results for clients and help them to achieve their liquidity goals whether just for LBPs or for the longer-term. As Crypto continues to evolve, so do our strategies and the technologies we use to ensure we remain at the forefront of market-making innovation and expertise.

Reach out to ck@faculty.group if you want to learn more.

About Artis

Artis is a client-focused market maker that works closely with our clients to provide tailored, synchronised solutions that meet their specific requirements every step of the way. Our USP is our ability to customise services around the needs of our clients, regardless of market conditions or business life cycle. 

We help our clients navigate the complexities of market making, treasury management, LBPs and CEX support in order to achieve their critical milestones, increase the number of token holders, build their user base and extend their financial runway.  We believe in building long-term relationships that grow with our clients to deliver financial success for everyone.

Hendo Verbeek

Hendo Verbeek is Director of Artis, Faculty Group's Market Maker. A keen sports car enthusiast, his passion is connecting his automotive sources of joy with children's charities.

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