Analysis of similarities and differences and prospects of six IDO platforms, including Uniswap, Balancer and Bounce
Source: Chain Catcher
作者： 谷昱
IDO: The Characteristics and Status of the Seven Platforms
Thanks to the optimization of DEFI infrastructure and the large-scale increase of DEFI users, more and more projects choose IDO to raise funds, such as UMA, MTA, API3, Prep and other well-known tokens, bringing significant wealth effect, and the number of IDO projects is also increasing significantly recently.
In this context, more and more IDO platform and model emerged, recently Sushiswap also chose to enter the bureau, for IDO market to bring more influence and attention.
In this article, Chain Catcher will introduce the main IDO platforms and their mechanisms, such as Uniswap, Balancer, Polkastarter, Bounce, Mesa, Dodo, etc., to show the potential and future of IDO as the current hot financing channel. (The market is risky and this article does not constitute any investment advice.)
Development history and current situation
Recently, IDO has once again become a high-frequency vocabulary in the crypto market. In the past week, at least 8 projects such as Razor, OptionRoom, UmbrellNetwork, Bot Ocean and DAOventures have been carried out or announced that they will carry out IDO. The price of tokens on the IDO platform is also rising. It can be said that IDO has become a popular initial public fundraising method for many blockchain projects.
At present, the external definition of IDO is different, for example, some people interpret it as the first DEFI issue, and some people interpret it as the first DEX issue. Considering that the platform of issuing tokens of many projects has gone beyond the scope of DEX at present, this paper will take the definition of the first DEFI issue to elaborate.
Tokens for the first time in the past few years, block chain project issued by the way of experience too many rounds of change, from the early based on intelligent contract transfer ICO, to exchange for the first time after that to release and Coinlist compliance platform, its threshold and cost present the trend of more and more high, and even many block chain project have not publicly issued tokens steps.
However, with the emergence and popularity of decentralized exchanges, many project parties began to try to conduct initial coin public offering on the DEX platform. For example, Binance announced that Raven Protocol would conduct IDO on its DEX platform in June, 2019. However, due to the performance problems of DEX and market education problems at that time, IDO did not become popular.
However, IDO mechanism makes the project side directly face the community group financing, especially makes the project early supporters get more financial returns, at the same time as a marketing means can also get more market attention, still attracts the attention of many project side.
From June to July 2020, thanks to the optimization of DEFI infrastructure and the massive increase of DEFI users, a large number of DEFI projects have chosen to launch initial coin offerings on Uniswap, such as UMA, BZX  And other well-known projects, in addition to many speculative new projects.
Specifically, Uniswap AMM mechanism, pattern of IDO project party needs to create pool based on intelligent contract in advance and according to the proportion of 1:1 top-up tokens and ETH or reserves, such as DAI, and then users buy tokens in the pool, along with the approach buying fund, tokens, pushing the price according to the curve models will follow.
Jumped at the same time, the mechanism are derived "scientists" problem, due to higher gas cost users tend to complete the transaction earlier and get more preferential price, so many "scientists" will use the machine algorithm and high gas ahead, it is easy to cause under the market mania prices rose sharply, at the same time for ordinary users involved unfair.
Therefore, around the pricing mechanism, entry threshold and other features, since then the DEFI market has derived a large number of IDO solutions and projects, including Bounce, Polkastarter, MESA, and Sushiswap recently launched MISO.
From the point of platform type, now IDO platform can be roughly divided into comprehensive DEX platform and specialized service IDO auction type platform, a typical representative of the former for Uniswap, Balancer, etc., can be available for the project from the tokens issued to establish a series of functions such as liquidity, on behalf of the latter is Mesa, Bounce, Polkastarter, specifically for the project to provide the rich variety of tokens, distribution and sale strategy, but not directly to create liquidity pools for tokens.
At the same time, most of these platforms have their own characteristics in price discovery mechanism, whitelist mechanism, access mechanism and so on, basically meeting the multiple needs of the project parties for the initial public offering of tokens.
At present, the relatively well-known IDO platform includes Uniswap, Balancer, Polkastarter, Bounce, MESA, Dodo, etc., in addition to Bonfida, KyberSwap, Poolz and other DEX also support IDO, the next chain catcher will be the main IDO platform and its mechanism for a detailed introduction, which was introduced in the previous Uniswap is no longer described.
Balancer: Liquidity guide pool
Balancer, an AMM-based DEX, last year launched a solution called Liquidity Bootstrapping Pools (LBP) that allows project teams to conduct initial currency public offerings in Balancer while building Pools with deep Liquidity on the platform.
It is understood that the issue of liquidity guide pool time is 3 days commonly, the project party is free to set its own initial weights of the tokens in the pool, the maximum deviation ratio for 8, that is, the pool of reserve assets will be 2% of the tokens of 2% and 98% of project, project party does not need to have a larger capital volume under the condition of reward liquidity, contemporary COINS and reserve assets value is proportional to the initial price.
The liquidity guide pool also provides the project side with the ability to quickly adjust the weight by adjusting the proportion of reserve assets to reduce the value of the tokens in the pool and prevent the eventual price spike caused by early speculation.
Therefore, those who want to participate in the token purchase can purchase the token when the value of the token is in line with their expectations. Under such a design mechanism, the opening price is often deliberately set high, and the better price may come later in the event.
To a certain extent, this mechanism can avoid the influx of users to buy because of FOMO and restrain the situation of robot "jumping the ball", so that all participants can compete fairly, reduce the market price volatility, and then the value discovery of tokens can be completed more smoothly.
To date, at least 5 projects such as APY.Finance (APY), Perpetual Protocol (PREP), and Furucombo (COMBO) have done IDO through the Balancer liquidity guide pool mechanism.
MESA: Block auction mechanism based on ring transactions
MESA is a DEX project built on the Gnosis protocol, maintained, owned, and hosted by DXDAO, that supports a simple market-making strategy for stablecoins. Since July 2020, the platform has conducted at least 9 IDO, including MSTable (MTA), DHedge (DHT), API3 and other well-known projects.
The platform allows bidders to set bidding quantities and price limits, and users to participate by submitting price limits. Compared with other IDO platforms, the main features of Mesa are ring trading and bulk auction respectively. At the same time, users are required to recharge their money to the official wallet address in advance to achieve the purpose of pooling, maximizing liquidity and preventing pre-auction.
Specifically, ring trading is an order settlement in which Mesa allows users to participate in auctions using multiple assets, not limited to specific trading pairs, to pool and maximize liquidity by sharing liquidity among all trading pairs and aggregating all orders into a single order book.
Block Auctions are those in which Mesa users' bidding orders are not settled individually, but in batches every five minutes. At the beginning of the five-minute batch auction, all user bidding orders are listed, and then 30 orders are selected based on price and amount. An out-of-chain solver initiates an open competition for the best settlement scheme, and a single settlement price is determined by a specific calculation formula. At the start of the next five-minute auction, all bidding orders are completed in batches and settled on the chain.
Mesa charges a 0.1 percent fee for each closing order, which is also used to cover gas costs for customers. To ensure that the platform doesn't lose money, Mesa recommends that users subscribe for a minimum of 1600 USDC, too low order will not be settled.
This mechanism means that all participants in a single batch buy tokens at the same price, which can avoid the situation where some users pay high gas fees to "grab the auction" and provide a relatively fair and equal opportunity for users to participate.
Polkastarter: Fixed swap pool
Polkastarter is a cross-chain token exchange and auction protocol. The Beta version of Polkastarter went live on Ethereum in December last year and is expected to migrate to Boca in the first quarter of this year. It is also IDO's most frequent platform recently.
On September 20 last year, the project announced $875,000 in seed and private funding from NGC Ventures, Moonrock Capital, Signum Capital and others.
Compared with other IDO platforms, Polkastarter mainly has two characteristics. One is to launch a fixed exchange pool, so that the project can set a fixed price for the token for auction; Second, the project can set up a whitelist for the token auction, only a specific address can participate in the auction, users usually need to complete a series of tasks stipulated by the project or sign up for a lottery in order to obtain the whitelist qualification.
At present, there are at least 15 projects to conduct IDO on the platform, but almost all of them are not well known. Meanwhile, the number of participants is mostly in the range of 100-300 people, and the amount of IDO for a single user is also relatively low, usually within 0.2-0.5 ETH.
Bounce: Community Authorized Auction
Bounce, a decentralized auction protocol for token swaps, was launched in July last year by Ankr founder Chandler Song. Investors include two institutions, Parafi Capital and Blockchain Capital, as well as industry players such as Synthetix founder Kain Warwick and Aave founder Stani Kulechov.
Bounce currently has two main products: a decentralized auction platform and a recently launched community-authorized auction platform. The former is little different from other IDO platforms. Any project party can set the number of tokens, the maximum amount of ETH received, duration and auction strategy on this platform, which supports fixed exchange, Dutch auction and sealed auction, etc. Funds exceeding the upper limit will be bounce back to the user.
The Bounce Community Authorized Auction Platform, where the community of BOT holders decides which items can be activated and sold for tokens, assists in creating auctions for eligible items. At the same time, individuals who want to participate in certified auctions need to go through KYC and whitelist according to the requirements of each program.
DODO: Crowdpooling
DODO is a DEX product established in August 2020. Based on the PMM algorithm with nonlinear price curve, DODO proposed the IDO model named crowdpreparation pool, which has been carried out for at least three times so far.
The group preparation pool is specifically provided by the project party with a certain amount of tokens, and the unit price and issuance amount of tokens are specified. Anyone can top up to subscribe within a specified period of time, and if the user subscribs more than the token offering amount, the token amount is allocated according to the amount of money the user tops up. After the end of the crowd-funding period, the public capital pool will be automatically established, and the crowd-funding price will be used as the opening price to immediately open the spot trading market.
At the same time, DODO has set up a "liquidity protection" mechanism. The buying in the spot market is made up of the funds topped up by users, and the selling is made up of the remaining tokens after the crowdfunding period. These initial liquidity belong to the sponsors of the crowdfunding pool, but during the liquidity protection period, the sponsors cannot withdraw the liquidity.
Sushiswap: A package solution
On February 2, Sushiswap announced the launch of the IDO product Miso, which aims to simplify the process of creating tokens on the Sushiswap exchange and launching new projects, including creating tokens, building machine gun pools, creating token offering strategies, starting liquidity mining, etc., in order to attract more new projects to build liquidity on the platform.
Compared with Dex such as Uniswap and Balancer, the main feature of Sushiswap's MISO is that its solutions are richer and more systematic, and at the same time, it supports project parties to adopt a variety of selling strategies, including fixed-price crowdfunding, bulk auction and Dutch auction.
Together IDO market now has become the focus of DEX platform, one of the major and IDO platform at the operation convenience, price discovery mechanism and so on each has its characteristics and advantages, but due to the current market sentiment, basic no shortage of high quality project financing, IDO may be hard to become the main choice, most of the high quality project the long tail market project may will be the main object, the risk also nots allow to ignore.
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