Flexible Liquidity Locking

Overview / Use Case

Automated Market Making (AMM) is the core mechanism on which the decentralized exchange model is built. Rather than the traditional, two-sided maker-taker transactions with order books typically seen on centralized trading platforms, liquidity providers (LPs) instead enable both sides of the market by adding both tokens that make up a trading pair to a liquidity pool. DeX users then trade with this pool rather than directly with other traders, with the current market price calculated algorithmically based on the ratio of the two tokens contained within the pool.

This trading liquidity pool is therefore the backing that underpins the entire value of a token - without it, a token cannot be sold and is worthless - and it is for this reason that locking liquidity (meaning it cannot be removed, or ‘rug pulled’) has become virtually mandatory as a trust-building gesture by dev teams across crypto.

The fact that a DEX liquidity pool is what backs a token’s value means that liquidity can also be seen as an asset that belongs to the entire community, but one which can currently only be accessed by selling portions of that token and impacting price. Whilst robust trading liquidity is essential to offer security and value to investors, there is no consensus on what the optimal level of liquidity backing for a token actually is. With liquidity that is too thin, prices become highly volatile in the face of large trades, and the liquidity backs only a fraction of the value of investor holdings. Over-liquified tokens, by contrast, often attract complaints from holders about the slow price movement resulting from the huge trading depth available on either side of the trading pair.

Between these two extremes, the ideal amount of liquidity is a much more subjective question - with perhaps a different answer for every project - and is therefore something that should logically be in the hands of token holders themselves to decide. For the first time anywhere in DeFi, our flexible liquidity locking will enable projects and their communities to access limited amounts of their token’s liquidity pool, for use with specific features available only on our exchange. These features will be accessible securely, through a combination of community governance and developer discretion, to democratize the concept of trading liquidity and put its control in the hands of those to whom it actually belongs.

Assisted CEX Listing (P2)

Despite the meteoric rise of DeFi trading in recent years, centralized exchange listings remain an important part of the cryptocurrency ecosystem, and a first exchange listing often represents a significant milestone in the growth trajectory of a new token project. CEX listings, however, bring with them significant costs, in both the initial listing fee, and ongoing expenses in the form of order book filling/market making.

Flexible Liquidity Locking will allow projects whose tokens have sufficient liquidity to reallocate part of that liquidity, and use it to cover some or all of these expenses without the need to use their own budgets or sell off tokens.