How Will the Entity LDM Work?
Entity’s Liquidity Diversification Marketplace (LDM) will create a range of exciting opportunities for both projects and users. Join us for a sneak preview of this upcoming module, a detailed example of how it will work, and more!
DeFi Summer is coming
As a Growth Engine for Web3, Entity is building powerful on-chain modules to support the Entity Launchpad and help elevate the MultiversX ecosystem.
Let’s dive into one of the key DeFi features Entity will release in 2023: the Liquidity Diversification Marketplace (LDM).
The Entity LDM: built for growth
Just like Entity, the LDM is designed to help both Web3 projects and investors achieve growth.
The LDM is essentially an order book system that empowers projects to hold special token sales for the community.
During each sale, investors can swap for discounted tokens in exchange for accepting a short lock period. Once the lock period is over, users are free to claim their new tokens and use them however they want.
We will break down the LDM’s range of benefits for the entire ecosystem later in this article. But first, let’s see how this feature will work in practice!
Time for an example LDM sale
Let’s say that AshSwap has a lot of $ASH and want to diversify their treasury. Meanwhile, investors in the community have a solid amount of ASH/USDT LP tokens.
So, AshSwap decides to start an LDM sale with a locking timeline of 5 days. Entity takes a snapshot to determine the spot price of ASH, then AshSwap agrees to sell up to $100,000 of ASH with a 10% discount from the snapshot price.
Once the sale begins, investors can trade ASH/USDT LP tokens for ASH with a 10% discount. This means that $100 in LPs can be traded for about $110 in ASH tokens.
Sounds intriguing, but what’s the catch? Well, users must remember that tokens bought from the LDM will be locked for a predetermined period. Individual projects can decide the length of each sale’s lock period, up to a maximum of 30 days.
In this example, the lock period happens to only be 5 days. If there isn’t any major volatility during this timespan, users will be able to quickly achieve a solid gain from their LDM investment.
But the LDM has far more use cases besides quickly flipping tokens.
More power for builders and investors
As mentioned, the main benefit for the community is enjoying access to discounted tokens. Once the lock period is over, investors can use their tokens however they want.
For long-term investors, this is a great opportunity to acquire your favorite tokens at an attractive price point. After the lock period ends, users are free to put their new tokens to work in other strategies such as staking or on other DeFi platforms such as Hatom and DX25.
The LDM also has plenty of benefits for builders!
By empowering projects to conveniently tap into liquidity, the LDM helps builders get the most out of their treasuries. This is a great way for projects to diversify, which can help manage risk and increase their upside potential. This also opens the door to new passive income opportunities such as exchanging your own token for an LP pair to easily start earning LP fees.
Additionally, the LDM helps builders protect the value and decentralization of their tokens. Projects can access liquidity to keep their business running without having to sell a large amount of tokens on the open market or directly to a private investor. Instead, the LDM lets builders connect directly with the community and enjoy reduced volatility due to the locking mechanism.
Projects will be able to customize each LDM sale to determine factors like the discount offered and the length of the locking period. They can also choose to accept either LP tokens or regular ESDTs from users, and provide any type of token they want in return. The use cases can become quite creative — it will even be possible to sell discounted NFTs!
It’s time to build on MultiversX
Overall, the LDM is just one of the ways Entity will help to enhance and expand the MultiversX Network.
This module will support Entity’s community, partners and launchpad projects. The LDM will fuel the decentralized growth of the ecosystem, and create potential synergies with other upcoming Entity modules like the Staking Farms.
Stay tuned for more info!
Get ready for liftoff
For more news about the Entity Launchpad, LDM, and more, join our community on Twitter and Telegram and subscribe to our Official Newsletter.
Enhancing the MultiversX Ecosystem
Entity is a Launchpad and suite of cutting-edge tools for Web3 builders and investors. Entity is focused on catalyzing growth in key areas such as DeFi, GameFi, NFTs and real-world blockchain applications.
MultiversX is a highly scalable, secure and decentralized blockchain network created to enable radically new applications, for users, businesses, society, and the new metaverse frontier.
