Liquidity Mining Protocol

Introducing the LMP Fund by Degen.VC

We are pleased to unveil the third product in Degen.VC trifecta against traditional VC (and we reserve the right to continue expanding!). The first was our curation market, the next version of which will be live soon, the second was the Pure Launch where the $DGVC LP receives alphadrop launches, the third is the Liquidity Mining Protocol.

The Liquidity Mining Protocol ($LMP) is a new token that runs a DAO managed venture fund of whitelisted investors.

Here’s how it works:

1. Whitelisted investors can send value (ETH, USDt or other ERC20 tokens) to the LMP Fund dapp in favour of any listed project.
2. The funds are staked until $LMP holders vote to give the funds to the project in exchange for project tokens that the LMP Fund dapp holds.
3. While staked, investors receive a stream of $LMP tokens (a phenomenon called excavation).
4. If funds are released to the project, $LMP holders receive a percentage of the funds raised (a discovery, if you like).
5. The $LMP holders can vote percentage reward up or down within a range.
6. If the project is declined, the funds are returned to the investors. Investors still retain their $LMP tokens.

Helping those with “fuck you” money

The Pure Launch (alphadrops combined with a new Uniswap market) is not a viable playing field for those with “fuck you” money because they cannot spend large amounts without sending the price into the stratosphere - far beyond realistic valuations and ultimately circumventing their desires. Not a win-win-win.

However, neither do we want to allow these guys excessive advantage over smaller players which is where the LMP Fund dapp uses a token bonding curve to assign token price. If you want to buy them all, you will have to do so at a premium.

It's hard to beat a good interplay

Last year, the Degen.VC team were working with a standard ICO-type smart contract that auto-deployed a Uniswap market when completed. You can see this on the demo video live on Degen.VC. We also looked at an innovation where the smart contract would send/withdraw tokens and ETH to/from the Uniswap market at set intervals in the crowdsale depending on how the sale was proceeding. In this way, all the tokens would be sold because the price would become dynamic.

But this idea was fraught. Firstly, sophisticated bots could run amok on Uniswap to capitalise on the model through front-running. If not killing it completely, it would certainly take the fun out of it for degens. We also wanted to move past a world where you could only invest with ETH, which we know is limiting.

Recently, two huge factors came into clear view and we are alive to the possibilities they present. Having successfully rolled out the Pure Launch model, we quickly saw that a new order of market price discovery and liquidity provision is now viable. Next, Sushiswap’s infamous vampire attack on Uniswap additionally illustrated the power of a token that incentivises liquidity mining.

The LMP Fund creates the opportunity for a beautiful interplay between two markets. On the one side, the Uniswap market post alphadrop is doing its thing and if the project has strong fundamentals, it’s probably providing some seed liquidity for the project to use. On the other side, the LMP Fund is a place where people can put money down at any stage, incentivised to do so early by a token bonding curve, while waiting for the $LMP community to feel confident enough in the project’s progress to activate the sequence of payment tranches to the project and thus release its tokens to investors.

This interplay allows different types of project backers with different appetites for risk and desired modes of participation to observe each of the behaviours of two distinct funding mechanisms. If a whale provisionally buys 50% of the entire allocation to the LMP Fund, then the price on Uniswap is likely to rise sharply. If the liquidity provision on Uniswap is lagging then it is likely that LMP Fund investors will not be so interested in tying up their liquidity.

Why Whitelisting? Why KYC?

Guys. We have a NO-KYC launch solution — the Pure Launch.

But, if you want to sell tokens, you need to have KYC. It is the perfect time in the progression of our life-cycle to create a hybrid-model construct where those who want to go the presale route are able to do so — and they will still have certain DeFi advantages and indeed characteristics, notably excavation and discovery opportunities as described above. This brings a couple of fascinating cross-connects into focus and frankly it’s not something we could ignore.

The power of token bonding curves

You all know that our upcoming DEX airdrop is based on the mythic crypto phenomenon known as a token bonding curve. What is cool about the mathematics of this is that it is as eminently usable in a DEX as it is in our Liquidity Mining Protocol launch. Rewarding early adopters and near-eliminating arbitrage opportunities that whales capitalise upon is a handy feature and one that is a no-brainer in terms of the LMP Fund concept.

Whilst this is a digression from our standard model, it fits perfectly into the notion that anyone can be a VC and creates the conditions for people who have different views on what it means to be a VC to participate equally — more democratisation!

LMP Fund’s Roadmap

LMP Fund will first enjoy the rigour of the Degen Lab’s process. Its Discord channel will be open to the DGVC LP (need the liquidity token to enter due to the collab.land bot admin) and will be used to prepare for the launch of the $LMP token.

This group will quickly seek consensus to determine the token allocations for Degen VC, project, airdrop and potentially LMP Fund itself. Once reached, the airdrop will proceed relatively quickly.

The LMP will have to be built and audited. This will take several months. But, the DAO hack seems like its a million miles away now. There is so much infrastructure in the Ethereum ecosystem — shoulders we can stand on. Think of Moloch DAO and Shef Nomi’s Master Chef contracts by way of two examples. What was a pipe dream in the past is a shoe in today.

The LMP.FUND alphadrop will allow early birds to speculate in the new Uniswap market — a futures market if you will.