Liquidity Bootstrap Curve (LBC)

Ascending Price Auction

Armada’s Liquidity Bootstrap Curve (LBC) token launch mechanism allows for dynamically changing token weighting over the lifetime of an auction without the involvement of a liquidity provider.

Using this launch mechanism, a project starts simply by determining an initial starting token price for the auction. As buyers enter the market, thus increasing the number of tokens in circulation, the price is driven upward. An automated market maker (AMM) sets the price of a token relative to the supply of that token.

Projects are given the ability to determine the rate of change in price per change in circulating tokens using either a simple exponential curve or an advanced curve that changes over time (for example: a curve that starts at a constant price, then changes to an exponential function after a predetermined amount of time).

LBC-style auctions are best suited for projects interested in fixed-supply token launches. Curves are constructed using time-dependent weights that allow the owner to select the starting token price and ending price over the allotted auction time per given supply in circulation. Every auction curve consists of a Base Token and a Target token. The Base token is the token used to set the price relative to, and the Target token is the token the Automated Market Maker sells. As LBC curves are designed to drive an upward movement in price as bids are made, this auction style should hypothetically encourage early activity by participants.

Upon completion of the auction (or as funds are received during the auction) proceeds can be withdrawn and distributed back to the project to bootstrap liquidity for critical ongoing project functions such as operations and protocol-owned liquidity.

For those interested in learning more about Armada’s LBC, check out the launch simulator and connect directly with core contributors in the Armada Community Discord.