Liquidity Bootstrapping Event (LBE) Announcement
This article discusses why and how LBE works, as well as incentives for participants.
We have previously announced that our public sales will follow the private sales targeted at organizations, institutional investors, and Mocossi owners. However, after careful consideration, we have decided to launch the token through a Liquidity Bootstrapping Event (LBE), through which 2% of the total supply will be distributed. The LBE for the MCOS/ADA pair is scheduled for mid-July on Minswap, where users can simply deposit ADA for MCOS.
As one of the largest DEXs on the Cardano blockchain, Minswap is launching a series of initiatives to help projects bootstrap liquidity. Following Minswap’s successful launch of its own LBE in Feb 2022, Mocossi is proud to be the first project to implement LBE on the Minswap Launch Bowl.
This article discusses why and how LBE works, as well as incentives for participants. The launch dates and other detail will be announced closer to the event.
Why LBE?
The goal of an LBE is to make the token launch process fair for everyone regardless of the size of their portfolio. This standard facilitates fair price discovery, protects the reputation of new projects, eliminates bot manipulation, prevents whales from price manipulation, and offers a wide distribution of tokens.
Keep bots and whale manipulation at bay
Bots and whale manipulation are two of the most serious concerns about launching a token. We all know that bots can operate much faster than actual investors. Their ability to make purchases at the lowest price and dump them on supporters is impressive. Constant monitoring allows them to gain massive profits at the expense of our community. It is not uncommon for bots to snipe the initial list price of a token within seconds of it going live, screwing retail buyers and forcing them to pay more. Additionally, whales may decide to withdraw large positions at the very end of an LBE, causing the price to dump. This kind of manipulation, however, is virtually impossible under LBE restrictions, including, but are not limited to:
The price will only be determined at the end of the Discovery Phase and will remain the same for everyone.
A 25% withdrawal fee will be applied during the last two days of the event.
Fair Price Discovery
MCOS/ADA will not have a set price upfront, rather the community will determine a fair price based on how much ADA is provided to the Liquidity Bootstrapping Pool during the LBE. To be specific, Mocossi Labs will supply 2% of the total token supply to the LBE, and users deposit ADA to this pool. Then a fair price is discovered based on the ratio between MCOS and ADA at the end of the event.
During the LBE, Minswap's UI will display the MCOS/ADA pair's price.
Broad Distribution
The LBE provides permissionless participation and low entry barriers, allowing users to participate with only ADA in their wallets. Everyone, regardless of his or her capital size, will be able to participate in the event equally, resulting in broader MCOS distribution.
Even with the above benefits, users should take note of the potential price volatility as there is likely to be significant fluctuation during, before, and after the LBE. It is expected that the starting price will be very low compared to the current price and will adjust as the event progresses. Moreover, the price may also change significantly at the last minute.
How does LBE work?
Adapted from Minswap’s LBE approach launched in Feb 2022, Mocossi’s LBE consists of 2 main phases: Discovery and Encounter.
Discovery phase
The discovery phase will last for 10 days, during which users can participate by providing ADA. Users who deposit ADA will receive 'mcosADA' (this name is updated from ‘purrADA’ upon finalizing with Minswap, the mechanism should remain the same) to represent their contribution to the Liquidity Bootstrapping Pool (1 mcosADA = 1 ADA). In addition, as the event progresses, participants can claim back their ADA by returning the 'mcosADA' whenever they want. However, note that to prevent price manipulation, any 'mcosADA' redemption during the last two days of the event will be subject to a 25% fee. Consequently, if you deposit 100 ADA and redeem the 100 mcosADA within these last two days, you can only claim back 75 ADA.
The fair price ratio will be determined/discovered based on the ADA amount users deposit at the end of the Discovery Phase.
Encounter phase
Participants can redeem their 'mcosADA' obtained during the Discovery Phase for MCOS/ADA LP tokens equal to their share of mcosADA in the entire pool. A fixed conversion rate will be used at the end of the event to convert 'mcosADA' into MCOS/ADA LP tokens based on the MCOS/ADA ratio. Note that there is no time limit for redeeming LP (the Minswap's LBE limited redemption to 14 days).
Incentives
To incentivize LBE participation, LBE participants will receive a functional NFT and a PvP NFT.
The functional NFT will act as a 'ticket' to participate in the exclusive farm pool with higher APR and triple farm tokens that Minswap operates (meaning partipants will receive MCOS, ADA and MIN as rewards for staking). The exclusive farm pool is available only to LBE participants and later liquidity providers can not stake in it. Note that users can stake LP tokens to the exclusive farm pool only up to the amount they contributed to LBE. Additionally, the LP token amount will be encoded into the NFT's name. This means a wallet can only stake as many LP tokens into the exclusive farm pool as the amount encoded in the NFT's token name. However, the NFT will also be tradeable. In case a wallet contains two functional NFTs, the system will select the one with the highest value.
To illustrate the whole process, consider this example: a user participating in the LBE with 1,000 ADA will receive 1,000,000 LP tokens at the end of the event, along with an NFT with the token name 1,000,000. The user can then stake 1M LP tokens into the exclusive farm pool.
The PvP NFT is mainly reserved for PvP gameplay. Conceptually, with this NFT users can exchange for game assets in the PvP phase (more on that later, let's leave room for surprises and excitement :P).
Summary
In summary, Mocossi’s LBE consists of 2 phases: Discovery and Encounter. The Discovery phase will last for 10 days, and the price ratio will be determined by the market at the end of this phase. Entering the Encounter phase, users can claim their MCOS/ADA LP tokens, a functional NFT, and a PvP NFT. The functional NFT allows users to stake in an exclusive pool with higher APR and the PvP NFT is something useful for the PvP gameplay. Dates and other information will be announced closer to the D-Day. Follow us on Discord and subscribe to our newsletter to stay updated!
References:
https://www.loop.markets/liquidity-bootstrapping-pools-explained/
https://coinmarketcap.com/alexandria/glossary/liquidity-bootstrapping-pool-lbp
https://minswap-labs.medium.com/meteor-lbe-mainnet-launch-yield-farming-more-f73c6c2a8b37
Disclaimer: This document does not provide financial advice or guarantee a return on investment. Cryptocurrencies in general and NFTs, in particular, are highly volatile. There are greater risks associated with them than with any other investment. It is users' responsibility to do their own research and make their own judgments. Neither we nor our affiliates are liable for damages caused by users' decisions.