A new way of launching a token: The Community Fairlaunch

# Disclaimer: No Shill

I spent the last 1,5 years developing a DeFi project. However, I will not name the project here because this post should not be a promotion. Im hoping to open a discussion for our way to launch our token. Maybe it even inspires you to launch your own token this way instead of doing an ICO, fairlaunch, pinksale or all the other methods out there.

# Pre-Sale vs. Fair Launch

With over 50’000 people anticipating the launch, we had a tough problem to solve: How do we launch the our Token so everyone gets a head start, a fair price and dont have the stress about to buy in the perfect moment but can do this in a relaxed and easy way.

What projects usually decide between is a Token Pre-Sale or a Fair Launch.

* With a **classic Pre-Sale**, the community gets to buy the token at a fixed valuation beforehand – below the launch price. This usually leads to a huge selloff and dump right at time of launch. Furthermore, it is hard to pre-define an appropriate valuation.
* With a **classic Fairlaunch**, you just launch the token at a really low valuation, and let the community pump its price in a “*first come, first serve*” manner thus letting the market decide the real value. A huge price spike draws the attention of new users and is somewhat free marketing. However, what usually happens with a classic Fair Launch is that Sniperbots intervene. Sniper Bots are special bots that can buy much faster than a regular user. On the first second, a sniper bot buys a large proportion of the available tokens, pumps its price and then sells the bought tokens to the community at a much higher price. So it’s not only that you might lose money, you are also stressed while trying to buy at a perfect moment.

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Neither option seemed to be a good choice and I wanted to do something different. I wanted to combine the best of both worlds.

# The Community Fairlaunch

The **Community Fairlaunch** can be pictured as a *giant public sniper bot* (deposit pool). Investors can deposit their BNBs in this pool in a period of three days, starting on the **4th of August**.

At the end of the deposit period, the **7th of August**, the proportion of the entire pool is calculated so we know exactly who invested how much (%) BNB into the pool.

At the official platform and token launch on the **8th of August**, the following 3 actions are performed by the “public sniper bot” in the same transaction:

1. **add initial Liquidity:** As the first step of the sequence, Liquidity is added to PancakeSwap. ($250.000 in BNB and $500.000 of TOKEN) Now the token has officially launched. The price now is $0.50 and is referred to as “Listing Price”.
2. **buy Token:** In the same transaction, BNBs from the deposit pool are used to buy the token on the open market (Pancakeswap), thus driving the price up instantly. The price now is referred to as “New Price”.
3. **add additional Liquidity:** Lastly, the remaining BNBs in the deposit pool are used to add liquidity on pancakeswap again which decreases volatility. This liquidity is now permanently owned by the protocol. This is called “protocol owned liquidity” and ensures a constant level of liquidity and a more stable price. From now on, the token can be traded on pancakeswap.

After this sequence of events, it is calculated who in the deposit pool bought which amount of Tokens. Everyone in this pool will have bought tokens **at the exact same Average Price**. No matter if it’s a little fish or a big whale – it’s the same price for everyone. Through a calculated proportion of the BNBs used to “*buy Token*” and “*add additional Liquidity*” we ensured that the “Your Price” will be ⅓ of the “New Price”.

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Example with $10.000.000 in the deposit pool:

* Listing Price at TGE: **$0.50**
* Average Price / Your Price: **$26,83**
* New Price / Starting Price: **$80,49**

Those acquired Tokens are then distributed to the investor gradually in a linear manner over the course of one month. After a day, about 3.3% of the tokens are distributed, after a week roughly 25%, after 2 weeks 50% and after one month 100% will have been distributed to all participants.

Because the tokens are not released all at once or in different batches, we will not have shifted the race from “who can buy the quickest” to “who can **sell** the quickest”. The linear distribution mechanism allows for a dynamic and natural price discovery.

# The Benefits:

* Stress-free. The deposit pool of the Community Fairlaunch is open for 3 days.
* Completely fair and equal. Everyone from the community will get the same price.
* The new price, where everyone who didnt participate in the Community Fairlaunch will be able to buy, is exactly 3x higher than the average price of the participants.
* No sniper bots can buy before the community and then dump on them.
* No need to worry about slippage, gas fees or a fast internet connection.

# The Disadvantages:

* The tokens are locked for 30 days, this creates FOMO. People who buy after the Community Fairlaunch on Pancakeswap have their token instantly but at a 3x higher price
* If everybody sells off 100% instantly, you do not get back the same amount of BNBs back, since some of it is used to add liquidity.
* You don’t know what price you get beforehand. The price rises the more BNBs are deposited.

# Protocol Owned Liquidity

You may ask the question why some of the deposited BNBs are used to add more liquidity instead of buying the Token.

Let us address this with an example of $10.000.000 in the deposit pool. If we would use 100% of this money to buy TOKEN after the initial liquidity of $250.000 (in BNB) paired with 500.000 TOKEN is added, the New Price would spike up to $840 with the Average Price being $20.

This would make the token extremely pricey and volatile. If 10% of the TOKENs acquired by the community would be sold again, the token would drop by 96% to $34.

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In order to make the token more stable in price and ensure liquidity until eternity, we made a sophisticated calculation that determines how much BNB is used to “buy TOKEN” and how much to “add additional Liquidity”.

With the same $10.000.000 in the deposit pool and our calculation, 29.22% would be used to buy the token while 70.78% would be used to buy add additional Liquidity. The New Price would “only” be $81 instead of $840 and the Average Price would be $27 (⅓ of the New Price).

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The price decrease in a 10% selloff, has been reduced from 96% to 40%. This is still not little but it is has decreased volatility by a lot.

# Discussion and FAQ

I will happily answer all your questions to this approach down below. Criticism is very welcome. If anyone wants to have an excel sheet with the price calculation, send me a DM, i am not sure if I am allowed to post links or images here.

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**How is the 3x generated?**

Everybody in the Community Fairlaunch gets the same “Average Price” which is calculated the following:

Average Price = “Invested Sum” / “Number of TOKENS you receive”

After the deposit pool has used its BNBs to buy TOKEN, the price jumps to the “New Price”. On decentralized exchanges like pancakeswap the price is calculated by the “*Constant Product Formula*”.

For a high investment sum of 10 Million Dollar in BNB, the TOKEN price would skyrocket from $0,50 to $840,50. The Average Price would be $20,50. It wouldn’t be a 3x but a 41x. Above, in the chapter “Protocol Owned Liquidity”, it is explained why it would not be smart to let the token skyrocket this much but why it makes sense to cap it to a 3x.

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**Is a 3x guaranteed?**

No it is not guaranteed.

For the “New Price” to be 3x higher than the “Average Price”, at least $500.000 worth of BNB would need to be collected in the deposit pool of the Community Fairlaunch. Furthermore, some short term oriented people will sell their TOKENs as soon as they can which could put the price below the 3x. Therefore the 3x is not guaranteed but just an expression that starting from a investment sum of $500k the “New Price” will start 3x higher than the “Average Price”.

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**Do I have to use this Community Fairlaunch or can I also buy on Pancakeswap like I usually do?**

You will also be able to buy at Pancakeswap at the higher price. There your tokens will not be vested.

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2 thoughts on “A new way of launching a token: The Community Fairlaunch”

  1. I really do like this kind of approach. Do you have any illustrational material or calculation tools regarding this strategy?

    Reply

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