Changes To Our Raise Model
Another Innovation in How We Run Raises
Our investors love the Lithium raise model. The fact that every investor is guaranteed an allocation in a project is a breath of fresh air compared to the ubiquitous first-come-first-served model in the crypto-sphere.
Lithium is the pioneers of the overallocation model in crypto. A number of copycats have since introduced similar logic. We take it as a compliment.
One thing we never stop doing at Lithium is innovating.
Today we are proud to announce changes to our raise model, changes that are only favourable to investors.
Let’s dive in.
Problems with the Current Model
While the current overallocation model works well, it’s not perfect. There are a couple of issues we were keen to solve.
It’s Difficult to Predict a Raise Amount
When it comes to deciding how much we raise for each project, it’s a fine balancing act. On one hand, we want to maximise the raise, on the other we want to ensure a project sells out. This is critical for good perception of the project, and a successful launch.
Confusion for New Investors on what ‘Overallocation’ means
Our logic of everyone getting tokens in a project regardless of how much we raise is novel to most investors. We need to make it crystal clear how many tokens you’ll be getting and how much you’ll get refunded.
Solutions to Problems
We’ve implemented two changes that solve the above problems.
Introduction of Fundraise Goal
We’ve introduced a new variable, Fundraise Goal. This is the target raise for each project we launch. This is not the same as the Fundraise Limit, which is the max amount that could be raised for a project on Lithium.
The beauty of having a Fundraise Goal is that it gives investors a better indication of how a raise is performing compared to its targets, while not limiting the total amount of cash we can raise.
In this new model, the progress of a raise will hit 100% once the Fundraise Goal has been met. But unlike previous raises, a 100% raise will not trigger overallocation, that will only happen once the Fundraise Limit has been reached.
Introduction of Dilution
As 100% Fundraise Goal progress is no longer a signal that projects are overallocated we needed to make it crystal clear when this takes place.
From now on we won’t be using the word overallocated, it doesn’t make sense to people who aren’t familiar with crypto. Instead, we will use the term diluted. Projects will enter dilution when the raise limit has been reached. This ensures everyone can still get tokens in a raise. It will be clear on the project if Dilution has been reached, with a clear label and, of course, an estimate of the tokens and USDC refund you will receive.
In summary, this is the process for the new raise system.
- Project is deployed, with a Fundraise Target and a Fundraise Limit.
- Fundraise target is reached, raise shows 100% progress. Everyone still gets their full allocation.
- Fundraise goal is exceeded (for example 100–500%) but Fundraise Limit not yet reached. Project is not yet diluted and you still get your entire allocation.
- Fundraise Limit is reached. Project enters diluted state, your estimated tokens and USDC refund will be shown.
- Raise continues, there is no limit on the number of people who can invest, existing investors just get fewer tokens and a higher USDC refund.
We hope you’ll enjoy these changes. They make sure Lithium can raise the max amount possible while maintaining hype for a project. All while making everything crystal clear to investors, new and old.