Improving Liquidity of the Ethereum Ecosystem
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How do IDO launchpads drive more into DEXes? Besides an opportunity to talk and meet fellow crypto enthusiasts, the , which these launchpads enable, are also a powerful financial technology hub. It utilizes many features, which cryptocurrencies made possible for the first time in the history of humanity []. The best examples here being decentralized tokenized liquidity [] and the automated market makers or AMMs.
Binance defines a liquidity pool as “a collection of funds locked in a smart contract. In exchange for providing their funds, customers earn trading fees from the trades that happen in their pool, proportional to their share of the total liquidity.” [].
It proceeds to define key liquidity pool types as:
AMMs — a kind of decentralized exchange (DEX) protocol that relies on a mathematical formula to price assets, i.e., the primary driver [] behind Uniswap’s success [].
Yield farms or liquidity mines — which defines as “the practi of staking or lending crypto assets to generate high returns or rewards in the form of additional cryptocurrency” [], [], e.g., protocol and its vaults [].
Fixed-swap pools — a method to control the bonding curves [] via listing the projects within a pool at a fixed price during the token launch.
Crypto synths or synthetic asset trading platforms, e.g., .
Name your own.
Existing DeFi launchpads [] use varying combinations of liquidity pool types, (hopefully) adding some value via curated project lists to participate in the pool and ensuring a communication platform () for the pool participants. However, contrary to that, the degree of communication between the pool participants of the “industrial-scale” DEXes (think Uniswap or Binance DEX) is comparatively limited [].
Of course, as is true in any fairy tale: the community and the liquidity gifts from the generosity fairy🧚🏾♀️of the existing DeFi launchpads come with their own 🎃pumpkins attached.