📖Introduction
LaunchPad + Floor-price backed Uniswap
Overview
Ethrunes introduces a novel token issuance and trading model, which we call the LaunchSwap model, which combines the two formulas y/x=p and x * y=k. Its innovative pricing mechanism and exceptionally high liquidity make it a pool trading model that is very user-friendly. This document will provide a detailed explanation of the operational principles of the LaunchSwap model.
The operational principles of the y/x=p function will be a key focus of this document, as it is unique to the Ethrunes. Regarding the x*y=k product model, this logic is already well-established in the token trading market, and this document will not provide a detailed description, but relevant reference URLs will be listed for interested users to explore further through the links.
1. The LaunchSwap Model
1.1 Token Issuance
Upon deploying a token using the LaunchSwap model on the Ethrunes platform, the platform will establish a trading pool for the token pairs, with all tokens directly entering the trading pool. The issuers will adhere to a principle of no reservations.
1.2 Token Pricing Mechanism
The LaunchSwap model adheres to the y/x=p model as its foundation and follows the pricing mechanism derived from the x*y=k product model.
y/x = p model
x represents the number of tokens in the trading pool (i.e., the total issued quantity minus the quantity held by users);
y represents the quantity of ETH in the trading pool (i.e., the amount of ETH paid by users to obtain tokens);
p represents the current price of the token (in units of ETH).
| x (tokens in pool) | p (price quoted by ETH) |
|---|---|
(0, 50% of total supply] | Fixed value |
(50% of total supply, 100% of total supply) | y/x = p (based on x* y = k) |
Assuming a total issuance of 1000 tokens, the price curve of the token would be depicted as shown in the following graph. As the number of tokens in the trading pool approaches 0, the price of the token will become increasingly higher.
The price curve has an inflection point at M, where the trading pool contains 50% of the tokens. If the trading pool continues to decrease tokens and increase ETH (M1), the price of the token will rise; If the trading pool continues to increase tokens and decrease ETH (M2), the token price will remain at the floor price p0.
Following x*y = k product model
The x*y=k product model is a well-established underlying operational logic in the current DEXs. It refers to an automated market maker (AMM) model that uses a constant product formula. In a liquidity pool for a pair of tokens, the product of the quantities of the two tokens remains constant after each trade, maintaining the constant K.
For specific logic, you can refer to the following URL: https://docs.uniswap.org/contracts/v2/concepts/protocol-overview/how-uniswap-works
2. Incentive Mechanism
2.1 Token holder incentives
80% of trading fees are distributed to liquidity pool to increase the floor price of the token. This is equivalent to incentivizing all holders
2.2 Token issuer incentives
15% of trading fees will be rewarded token issuers. The aim of this incentive mechanism is to attract more high-quality projects to join the Ethrunes platform, thereby enhancing the overall value of the platform and user experience. This incentive mechanism creates a positive cycle where the addition of quality projects increases the platform's appeal, which in turn attracts more users and investors, ultimately fostering the birth of even more quality projects.
3. Protocol Fees
3.1 Fee Rate
For transactions made at the floor price, the platform will charge 0 fees. For transactions made above the floor price, the platform will charge a fee of 1% of the trading amount, with buying and selling fees collected in the form of ETH.
3.2 Fees Distribution
The fees from the LaunchSwap model will be distributed as follows:
Token Holder Incentives (80%): This portion represents the largest share of the fee distribution, with funds used to increase the floor price, benefiting all token holders. The LaunchSwap model not only attracts more users to participate, enhancing market depth and stability but also encourages long-term holding, further strengthening the platform's ecosystem.
Token Issuer Incentives (15%): By providing incentives to token issuers, the Ethrunes platform encourages more innovation and projects to join, enriching the platform's token ecosystem and market diversity. This reward can help new projects obtain necessary funding and market exposure in their initial stages.
Platform Improvements (5%): A portion of the fees is allocated to the optimization and enhancement of the platform. This includes not only technical upgrades and security enhancements but also improvements to the user interface, customer service, and the development of new features. This help the platform to operate stably in the long term, continuously meeting user expectations, and maintaining a leading position in a competitive market.
Through this fee distribution mechanism, LaunchSwap balances the interests of token holders, token issuers, and the platform itself, collectively promoting the construction of a healthy, active, and continuously evolving ecosystem.
4. Advantages of The LaunchSwap Model
Let's start with a table comparing the clear differences and pros and cons between the Ethrunes platform and other token issuance platforms.
| LaunchSwap Model | Other Token Models | |
|---|---|---|
Floor Price | Yes | No |
Fairness | High | Low |
Rug pull | No | Yes |
4.1 Floor Price
The pricing mechanism within the LaunchSwap model includes a floor price. This means that, in the worst-case scenario, tokens launched by LaunchSwap can be redeemed back from the trading pool at the initially established floor price p0.
This acts as a safety guard, ensuring that users have a certain level of protection even in the most unfavorable conditions. By setting a floor price, Ethrunes guarantees that even if the market undergoes unfavorable changes, the value of the token will not fall below this predetermined minimum limit. This mechanism offers a degree of security to holders and prevent the very disgusting rug pull.
4.2 Fair
In the market, many tokens are often heavily reserved or locked by their issuers at the time of issuance, which can be unfair to other investors. However, with the LaunchSwap model, there is no large-scale locking of tokens by the issuers, because issuers are also ordinary users.
4.3 No Rug pull
A rug pull in the crypto industry is when a development team suddenly abandons a project and sells or removes all its liquidity. In the LaunchSwap model, all tokens will be minted into a liquidity pool, with a floor price set upon deployment. No one can remove its liquidity including issuer.
Conclusion
The LaunchSwap model is dedicated to exploring a safer and more stable cryptocurrency trading model. We believe that after the fervor of speculative investment subsides, users will gravitate towards more mature and prudent decision-making.
The LaunchSwap model aims to investigate a safer and more stable trading mechanism to address this aspect of the market. The core philosophy of this model is to use a set of detailed rules and mechanisms to filter and support projects that have genuine value and potential for long-term growth, thus providing users with a more rational and mature investment environment.
The LaunchSwap model of the Ethrunes platform aims to lead the market towards a more mature and rational direction, ultimately achieving a win-win situation that protects the interests of users and promotes the growth of high-quality projects, ensuring stability and sustainability.
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