Virtual Liquidity Bootstrap Pool (vLBP)

Descending Price Auction

Armada’s Virtual Liquidity Bootstrap Pool (vLBP) protocol leverages an auction-based mechanism to ensure fair and equitable token launches. In contrast to a typical auction market, where the price starts low and then rises as multiple bidders compete to be the successful buyer, this launch structure allows project contributors to customize the decay curve* used in their token launch through various parameters, starting at a high price that gets lower throughout the auction.

Similar to Balancer’s LBPs, token price discovery in a vLBP-style launch is achieved over a set time, starting with a high price and incrementally lowering the price using a predetermined decay curve over the allotted auction period until someone places a bid.

vLBP curve calculations are purely math-based (without the use of pools) and managed by the Automated Market Maker (AMM), allowing the owner to select the rate of decay over the length of the auction. Token supply can either be set at a fixed quantity before the auction or tokens can be minted as they're purchased throughout the event.

The ability to customize the decay curve introduces a unique game-theory element through which a project could choose to drive urgency by choosing a short period for the auction with fixed supply and sharp decrease in price over a short timeframe, or a longer auction period that gives buyers added flexibility.

Upon completion of the auction (or as funds are received during the auction) proceeds can be withdrawn and distributed back to the project to bootstrap liquidity for critical ongoing project functions such as operations and protocol-owned liquidity.

Examples

Example of a curve with a steep early decay

Example of a curve with a more linear decay

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

*The rate of change in value to a token’s price over time as it nears expiration