Liquidity Provision Strategy
To ensure a robust and healthy trading environment for $TOKE, we have designed a comprehensive liquidity provision strategy.
Initial Liquidity Allocation:
15% of the total ADA raised will be dedicated to liquidity operations, with 5% of the total $TOKE tokens initially allocated to liquidity.
Initial Liquidity Pool:
200-300k ADA from the 15% allocation, combined with tokens from the 5% allocation, will seed the initial liquidity pool on Minswap, with a standard 1% buy and sell fee. The exact seed amount will be mapped linearly to the minimum and maximum raise bounds for the IDO, ensuring adaptability based on perceived demand.
Liquidity Operations:
A randomized zap-in schedule will be implemented with the remaining liquidity allocation. This approach aims to:
Demonstrate commitment to investing in our own project;
Sustain healthy volatility and promote longevity;
Establish a bootstrapping buyback program and increase liquidity pool depth simultaneously;
Reduce gamification by introducing randomness into the operation, making it harder for market actors to predict and exploit the pool.
A dual-RNG system will be employed, where both the number of intervals and the precise timing of each zap-in, down to the exact minute, will be determined randomly within each interval.
Zap-in Strategy:
The exponential ascending zap-in method will be employed to:
Sustain consistent volatility post-IDO;
Foster positive public sentiment;
Counterbalance reduced volatility as pool depth increases with each zap-in.
Below are two graphs illustrating these concepts.
Please note that the actual numbers and intervals will vary with the application of RNG parameters and will be finalized post-IDO.
Liquidity Management Council:
We strongly believe that multiple experienced eyes should constantly monitor a protocol's liquidity operations to ensure success and provide diverse perspectives. As we proceed through the zap-in schedule, a council of experts will be established to manage liquidity, ensuring adaptability and informed decision-making. They will be equipped with tools to make meaningful impacts and operate under a clear mandate. As governance is rolled out, this framework will be formalized to allow DAO participation in the council.
The council's mandate will focus on:
Maximizing trading volumes;
Sustaining healthy volatility;
Prioritizing protocol success and longevity.
The council's tools will include:
Bi-weekly votes on liquidity depth adjustments (up to 10%) of the seed pool;
The ability to seed and modify the depth of any Protocol-Owned Liquidity on-chain (up to 10%).
Each member must provide a rationale for their votes during the bi-weekly meetings to activate either tool.
Please note that any liquidity removed from pools will be transferred to a multisig wallet dedicated solely to liquidity operations. Additional pool seeding and adjustments will depend on the availability of funds in this wallet.
Liquidity Pool Optimization
To maintain optimal liquidity, the council will:
Monitor pool depth and adjust liquidity accordingly;
Explore arbitrage opportunities between DEXs;
Continuously evaluate and enhance liquidity strategies where possible.
Organic Liquidity Provision
To ensure long-term sustainability, the following options may also be explored:
Refunded tokens may be allocated as farming rewards to incentivize organic liquidity provision
Partnerships with LP providers may be established, potentially including lockup agreements and shared fees
Fees from trading, refunded tokens, or protocol-owned liquidity may be used for CEX listings, subject to consultation with the liquidity management council
Please note, our goal is to eventually transition the liquidity council to a DAO-led group as we work to solidify the governance framework.
By exploring this comprehensive liquidity provision strategy, we aim to create a strong and sustainable ecosystem for $TOKE, benefiting holders and promoting long-term success.
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