A Primer on Fair Token Launches and Liquidity Bootstrapping Pools

Why Balancer Liquidity Bootstrapping Pools are the optimal way for initial token distribution

An optimal token launch for a new crypto project aims to both fairly distribute tokens to community members and bootstrap the necessary liquidity with as little capital as possible. Distributing tokens in such a manner has historically proven to be difficult.

An IEO (Initial Exchange Offering) is one means of initial token distribution — one where the project is listed on a centralized exchange like Binance and users buy from it directly. This goes against the core principles of decentralization and can limit who is able to participate.

Although a disputed topic, word of mouth and small data points lead us to believe that the cost of listing a new token on such centralized exchanges ranges anywhere from $250,000 to $3 million in both upfront and recurring costs.

Luckily, with the invention of decentralized exchanges, the need for this centralized middle-man is being replaced. The permissionless nature of DEXes ensures that anybody can list their token without having to devote a considerable amount of capital for the privilege of listing. Initial DEX offerings (IDOs) became the preferred way of launching…