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Listing Types

To gain a deeper understanding of token launches, it's necessary to define some terminology. Here is a brief overview of these concepts and their significance:
This refers to the underlying design of a token, including aspects such as supply, distribution, inflation/deflation mechanisms, utility, and incentives. Properly planned tokenomics ensures stability, sustainability, and enhanced liquidity both during and after the token's launch.
This metric represents the hypothetical market cap of a token based on its maximum supply, regardless of whether the tokens are locked, vested, or otherwise. It's a critical metric that accounts for future supply influx, and it's often overlooked by retail participants.
These external entities place ongoing buy and sell orders for a token. This facilitates better liquidity for trading and reduces price volatility. They often use token loan options to provide liquidity during and after a token launch. This stabilises the token's price, and minimise sudden fluctuations. Their strategies also serve to further deepen a token’s liquidity.
This section offers an overview of various launch methods, including:
  1. 1.
    IDOs
  2. 2.
    ICOs/IEOs
  3. 3.
    Liquidity Bootstrapping Pools
  4. 4.
    Alternative Models
Each comes with its own unique advantages and trade-offs, and part of a successful launch entails choosing the best approach given one's unique situation and requirements.
While this page provides an overview, for more information on launch types we recommend referring to the sub-tabs of this section.

1. IDOs (Initial DEX Offering)

IDOs entail launching a new token directly on a decentralized exchange (DEX) platform, allowing users to purchase the token immediately. IDOs provide a way for projects to raise capital and distribute their tokens while leveraging the liquidity and accessibility of DEXs. These were fairly common mechanisms in the most recent bull market.
IDO Pros & Cons

Pros:

  1. 1.
    Easy to build, run, and understand.
  2. 2.
    Decentralized and transparent.
  3. 3.
    Immediate liquidity on a DEX at generation.
  4. 4.
    Low listing prices for early community members

Cons:

  1. 1.
    Liquidity bootstrapping is required and can lead to issues such as low liquidity, miscommunication between parties or timing issues.
  2. 2.
    Price is set without community price discovery.
  3. 3.
    Proper allocation is challenging.
  4. 4.
    Technical challenges from high transaction volume.

2. ICOs/IEOs (Initial Coin/Exchange Offerings)

Both Initial Coin Offerings (ICO) and Initial Exchange Offerings (IEO) are fundraising methods whereby a new project or startup issues its own cryptocurrency tokens to the public in exchange for funding. Investors purchase these tokens with the expectation that their value will increase as the project develops.
Assets are typically listed via a centralized exchange or other centralized intermediary. While both are valid launch mechanisms, IEOs are often viewed as more regulated and secure compared to ICOs because the exchange conducts due diligence on behalf of investors.
ICO/IEO Pros & Cons

Pros:

  1. 1.
    Credibility is derived from the exchange's due diligence.
  2. 2.
    Immediate Liquidity from the exchange's large user base.
  3. 3.
    Simple & Convenient

Cons:

  1. 1.
    High fees from platforms who may charge a significant percentages of token supply.
  2. 2.
    Unclear regulation around token sales.
  3. 3.
    Centralization due to reliance on a given exchange or platform.
  4. 4.
    Restricted transparency due to the off-chain nature of exchanges

3. LBP (Liquidity Bootstrapping Pool)

Liquidity Bootstrapping Pools are a common launch mechanism in the DeFi space that aim to bootstrap liquidity for new tokens on decentralized exchanges. They work by having a pool of tokens set up with a unique pricing curve. This curve starts with a relatively high token price and gradually decreases. Users can buy tokens from the pool at different prices, which changes the curve's shape.
This results in participants having the flexibility to enter the market when they see fit, fostering an inclusive token distribution process that facilitates an ideally efficient price discovery.
LBP Pros & Cons

Pros:

  1. 1.
    Fair distribution through gradual price decrease.
  2. 2.
    Community-driven price discovery.
  3. 3.
    Early buyer incentives.
  4. 4.
    Controlled supply.

Cons:

  1. 1.
    Complexity compared to traditional sales.
  2. 2.
    Timing risk for participants.
  3. 3.
    Potential price volatility for the duration of the LBP.

4. Alternative Launch Models

Many alternative launch mechanisms have been developed, which may serve different projects best based on their specific situation and requirements. Eclipse Fi is integrating all to provide maximum flexibility, and also aims to innovate and incorporate additional launch mechanisms, which are covered in our section on Modular Launches.
These alternative mechanisms include:
  • Fair Auctions: Tokens are allocated through a transparent auction with competitive bidding, ensuring equal opportunity and a uniform final token price.
  • Dutch Auctions: Starts at a high price and decreases until reaching a buy-in price, ensuring fair distribution and efficient price discovery.
  • Liquid Auctions (or Liquidity Bootstrapping Auction): a subset of LBPs that bootstrap new tokens by allowing contributions to either side of the liquidity pool, with the price established based on the ratio of tokens. Users can lock their position for a specific period and receive new tokens proportionally at launch.
  • Lockdrops: Participants lock up a certain token or LP position for a period, receiving new tokens proportionally at launch, encouraging long-term commitment and community engagement.