Introducing Lithium Shield
Supercharged Community Protection
*Edited on 14th November 2022 to add section — Application
Execution. Execution. Execution.
Picking a winner during bull markets may be as easy as picking projects by throwing darts at a board, blindfolded. The current environment however demands almost perfect execution in order to get a project off the ground.
We’ve recently seen some really promising projects fail, not only due to market conditions but also due to flawed execution to the detriment of our community. We’ve carefully listened to your feedback and decided to roll out two new initiatives, which aim to empower our community over projects and impose strict execution guidelines on launched protocols: Lithium Shield and Lithium Shield+
Up until now, our contract agreements with launched projects have stipulated that all raised capital will be delivered to a project 72 hours after their Token Generation Event (“TGE”). This clause was suitable during the last bull market because, quite frankly, teams could get away with pretty much anything and still be rewarded with a steadily upward-trending price.
More recently, however, challenges have become more prevalent, and poor execution has directly harmed our investors. With this backdrop, we’ve listened to our community's feedback and made key changes to our contract template.
Introducing Lithium Shield
Lithium Shield is our brand-new approach to further protect our community, which stipulates that all raised funds will be delivered to a project in line with the vesting schedule of the respective round. Given projects execute and vest their tokens properly, they receive their funds. Should projects fail to execute and vest properly, we look to refund investors the remainder of the raise and cancel the allocation.
It’s worth noting that this does NOT imply Lithium creating risk-free investments. Lithium Shield looks to protect the community in case of real edge cases like we saw with Astra Guild Ventures where horrific execution and maligned incentives resulted in aggressive selling.
We will soon be rolling out Lithium Shield+ for a select few projects. This is our supercharged community protection strategy and has additional protection designed to skew the risk-reward of participation significantly in the favour of our investors.
The core addition to Shield+ contracts is that Lithium requires projects to remain over the public raise price until the second vesting tranche is complete. Should it fall under this price and stay there for 7 consecutive days, we will refund investors (minus Lithium’s costs), and cancel the allocation.
It’s worth noting again that this is NOT risk-free. To expand on this point with Astra Guild Ventures in a worked example:
- The vesting was 20% at TGE, then 13.33% a month for 6 months
- On the second vesting point, 33.33% of the tokens would already have been vested
- 66.67% would therefore have been returned to investors, however, after Lithium’s 10% cover fee, investors would have received back 56.67% of their initial capital.
The aim of Lithium Shield(+) is not to remove the risk of investing in early-stage crypto projects, but rather to hold founding teams accountable for the promise they make to their investors, forcing a relentless drive for perfect execution.
As we’ve had many questions on which projects both Lithium Shield and Lithium Shield+ are applicable to, to make it easier to quickly see this as a potential investor, each project going forward will be flagged as such, with disclosure of the contract terms placed in the announcements. Any questions, please email me directly at email@example.com.