Comdex Liquidity Bootstrapping Pool (LBP)
In mid 2020, there was a huge buzz surrounding the crypto space, it was called Decentralized Finance and it was relatively new at the time, the main purpose was to democratize finance and take away every form of centralization as far as finance is concerned. DeFi promised a lot as it was a break from the norm and an upgrade to the traditional financial system. Through the usage of smart contracts, staking, borrowing and lending were all features of DeFi. However, as interesting and widely accepted as DeFi was, there were still a few drawbacks to this new financial system which were expressly evident in staking and DeFi liquidity pools. Crypto whales and institutional traders took advantage of their huge capital to exert a huge amount of influence in the market leading to pump and dumps in price when they invest and sell off dumping on retail investors with little capital. It is as a result of this, that Comdex proposed the Liquidity Bootstrapping Pool (LBP).
What is LBP?
LBP is a DeFi liquidity solution. It is a method DeFi projects employ in listing their tokens in liquidity pools. It ensures a smoother path to price discovery with no incentives for whales to overly impact the market and cause price volatility and it’s also a mechanism that when adopted stops greedy project owners from benefitting from a rug pull.
In an LBP, the project offering the token lists a pool with a predetermined maximum price. For instance, the ratio of the project token to the other token in the pool could be 80:20 at listing which will decline gradually until the both tokens in the pool are of equal value. In other words, the pool is listed at a predefined price and is programmed to decline over a period of time say sux months, allowing investors an opportunity to choose a fair price which they consider appropriate for entry making it possible for a larger community to get into a new project and also give the project ample time to actually develop their products while still maintaining price stability. The LBP is ideal for new projects that are trying to gain traction as it represents a form of safeguard for new projects and also helps preserve their reputation while they gradually introduce traders to their new tokens.
At Comdex, we believe that for projects to succeed at a sustainable rate, the smallest category of investors are also needed just as much as the whales and institutions are needed. So it’s important for us to allow all community members the chance to get $CMDX our native token at a fair price, hence the proposition of the LBP.
About Comdex
Comdex is a decentralized synthetics protocol in the Cosmos ecosystem, Comdex builds solutions to democratize finance by giving investors exposure to a large range if asset classes. For more information on Comdex -
Join the community: https://t.me/ComdexChat
Website: comdex.one
Medium: https://medium.com/comdexofficial
Reddit: reddit.com/r/Comdex/
Discord: https://bit.ly/ComdexOfficialDiscord
