Idexo Launch Options Review
As discussed in our Telegram group, idexo has decided to solicit feedback from the community directly through community vote on what is the preferable method for pursuing our upcoming token launch. In the following post, we will discuss the options that will be available to vote on.
1. Gnosis Auction
A Gnosis Auction is a type of auction created by Gnosis. It involves the project setting a minimum price and any whitelisted participant can set a maximum bid and amount they are willing to spend to purchase tokens. At the end of the auction, the auction system selects the lowest price at which all tokens sell out and any one that bid above that price end up purchasing their full desired amount at that price. Anyone who bid below that price would have their deposit returned.
A key positive of this mechanism is that it theoretically allows for value discovery to take place in a fair way. In a volatile market it is not left to the project to determine this value, the market does.
Whitelisting is entirely controlled by the project and thus to apply to enter the whitelist doesn’t require the staking of any other tokens. Also anyone approved to the whitelist is eligible to participate in the auction, there is no lottery system.
One criticism of this method is that this efficient value discovery limits the opportunity of speculators to benefit from this process. At the same time, it’s not really useful for a long-term project to cater to short-term speculators.
Another criticism would be that the competitive auction mechanism itself can lead to FOMO that leads to inflated value that could be hard in the short term for the project to sustain after the auction.
One way to mitigate that criticism would be to put a maximum bid price ceiling, effectively capping how high the value can go. While that is not currently existing in the Gnosis Auction smart contract, the idexo team has forked the smart contract and is currently studying whether it is feasible to do. One negative of that approach is that this would then differ the smart contract slightly from the fully audited one.
Of the available options this is the one the idexo team favours most.
2. Liquidity Bootstrapping Pool
A liquidity bootstrapping pool is a fully decentralized type of value discovery mechanism. It acts a bit like an Automated Market Maker (AMM) such as Uniswap though it has different parameters that are set. It’s a fairly complicated system to understand, involving different weights that change over time along a slope. It starts with a price set very high that goes down over time unless purchases move it back up. The main reason to start it high is to discourage bots front-running. The core concept is that it’s a bit like a game of chicken in that if buyers buy too soon they may pay too high, however if they wait too long they may miss out.
It’s a mechanism that has worked for several projects and clearly addresses some pain points in the market, however it is very difficult to understand the workings of it.
Also typically the LBP mechanism is used for much larger pools of tokens to be sold than that being contemplated by idexo. If this was the ultimate choice, it might be prudent to consider a larger pool.
Due to the fully decentralized nature of an LBP there is no whitelist.
3. Launchpad with Partner
This is the typical route at the moment for most IDOs. The project forms 1 or more launchpad partnerships and the public sale of tokens take place on that/those launchpad(s). Whitelisting thus takes place through the launchpad partner(s) and requires staking of that launchpad native token.
The core advantage of this route is that these launchpads already have done the work of building large audiences that are interested in getting access to early project tokens, providing the project potentially with broad market awareness in a short period of time.
The downside of this is that many people in this audience might be less interested in the project and more interested in short term speculation. Selecting the right launchpad partners therefore is an important consideration for this reason, among others.
For an already large community like idexo, this approach also can introduce a lot of friction for them in terms of asking the community to acquire and stake launchpad tokens.
The whitelist lottery system employed by launchpads also means that necessarily many people who apply do not end up with an opportunity to participate and also the system favors disproportionately long-term stakers of those launchpads since there are more lottery spots available based on the size of stake of that launchpad’s native token.
In an Initial Exchange Offering a project leverages a Centralized Exchange (CEX) in order to sell tokens in much the same way as a Launchpad does except they are sold to users of the CEX. In this way there is no whitelist, it is first come, first serve among KYC’d users of the CEX itself.
Depending on the CEX, there can be a very large potential audience to be accessed through this method, however it can be difficult to actually reach that audience to make them aware of the offering. This is where the choice of partner and the negotiation/agreement on programs is important.
In much the same way that there is friction in the community having to stake launchpad tokens to enter a whitelist, there can be friction for the community in needing to join a CEX.
A key issue at the moment with this choice is that some of the best partners in this area are not keen to be doing them, given recent performances of other IEOs and other factors. Therefore opting for this choice would likely take the longest to do of any of the options.
5. Launchpad without Partner
The Launchpad format is well understood and simple and idexo values simplicity. A potential whitelist is created through applicants and then a subset of that whitelist actually makes through to the final whitelist through lottery and KYC.
Fundamentally the smart contracts and User Interfaces for this are not complicated. They are not trivial either, however idexo has the resources to execute on this and has already built a foundation for what is needed in the UI with its app.idexo.io.
The advantage of going it alone for a launchpad format would be that the whitelist wouldn’t require staking of tokens and that the project would have complete visibility and control of that whitelist, while also retaining the familiar format. The disadvantage would obviously not getting access to the large audiences and implementation knowledge of right partners, as well as not everyone who applies for whitelist and would be eligible for KYC being able to participate – a lottery is a somewhat arbitrary way of gaining access.
No matter what path is chosen there are some pros and cons. One thing we wanted to make sure of no matter what path we chose is that we gave our community an opportunity to participate early in case they missed out due to one of the paths. For that reason we early on created our Early Adopter Community Private Sale for holders of Early Adopter NFTs who passed KYC, and which we recently restarted and extended to holders of our Community Competition NFTs with greater than 200 points who also passed KYC. With this we feel we have given ample opportunity for our community to participate early.
Given that, we see this step (our token launch) as being just that, a step, on our journey. We are thus looking for the way to put the best foot forward and position ourselves firmly for what comes after. That means to continue to build a strong community who understands and believes in the long-term value of the project and its utility. We look forward to receiving your advice through this vote and to what you believe is that best next step.