Dfinance announces community-fueled bonding curve sale on Uniswap
In order to support the launch of the incentivized testnet and to allow everyone to take part in it, we are announcing the launch of a community-fueled bonding curve sale on Uniswap. While in most bonding curve sales liquidity is provided by the token issuer which is usually beneficial mainly for the project, Dfinance takes a different approach and will allow and incentivize the community to provide most of the liquidity to the contract, thus encouraging real price discovery.
All information about token economics can be found here.
Providing liquidity to the Uniswap pool will issue liquidity provider (LP) tokens. Through the staking gateway, these tokens can then be transferred from the Ethereum network onto the Dfinance incentivized testnet and staked — thus earning inflation rewards on top of Uniswap pool fees. The staking gateway locks LP and XFI on the Ethereum and issues representations to a user-defined address on the Dfinance network. For the time being, the staking gateway will only function using pre-defined LP and XFI contracts, so please do not attempt to transfer other assets.
A bit about Uniswap and how it works
Uniswap is an open-source, decentralized exchange and liquidity protocol that runs on the Ethereum network and functions as an automated market maker (AMM). Uniswap does not use an order book and all trades are done on the smart contract level, (almost) without any centralized intermediaries. We say almost because the front-end access portal most people are using to access Uniswap is hosted by Uniswap itself, but the smart contracts are of course accessible without a front-end, which is just there to improve the user experience.
Anyone can create liquidity pools on Uniswap, which are connected to specific ERC20 tokens and a counterparty asset such as ETH or USDT.
These liquidity pools can then absorb liquidity (which can be provided by anyone), and issue in return liquidity provider (LP) tokens — a new type of token which represent the liquidity provider’s position and share in the pool, and which automatically earn trading fees proportional to their pool share.
Uniswap uses a decentralized pricing mechanism based on a bonding curve approach, which essentially takes the provided liquidity and spreads it along a token price/supply curve using a mathematical formula, thus creating a smooth virtual order book. Thus every time a token is purchased from the contract, the price of the next token is pushed up, and vice versa — when a token is sold to the contract, the price of the next token goes down.
Providing liquidity via Uniswap also carries risks such as impermanent loss. We strongly advise reading this official article which provides a good explanation on how Uniswap incentives work and the associated risks.
We thank our community for your continuous support and invite everyone to follow us on our social channels, join the discussions on our telegram and discord and subscribe to our newsletter.
Website | Twitter | Telegram | GitHub | Blog | Discord | Documentation
