LODE Launches Liquidity!

From the beginning, LODE set out to establish a digital silver and gold financial ecosystem that is honest, accepted, and used worldwide. LODE has made tremendous progress over the last five years. It is now time to bring this progress to the public market.

This article will discuss LODE’s upcoming liquidity initiatives, including the overarching strategy, accessible markets, how to add liquidity and receive additional token yield, vesting timelines and more.

What does “LODE Token Liquidity” really mean?

Before we get into the specifics, holders of LODE Tokens, AGX, and AUX Coins should understand what liquidity is.

When you are talking to someone you know or are reading about a project, and they reference liquidity, what they are referring to is an economic term known as “Market Liquidity.” Wikipedia defines market liquidity as:

“A market whereby an individual or firm can quickly purchase or sell an asset without causing a drastic change in the asset’s price. Liquidity involves the trade-off between the price at which an asset can be sold, and how quickly it can be sold. In a liquid market, the trade-off is mild: one can sell quickly without having to accept a lower price. In a relatively illiquid market, an asset must be discounted in order to sell quickly.”

Keeping this in mind, it’s important to understand that listing on exchanges in and of itself is not “liquidity.” However, it plays a pivotal role in creating it. Liquidity is established through buying and selling pressure on exchanges and financial markets, and LODE’s strategy for financial markets must include plans on how to drive the volume of both buyers and sellers to grow that daily trading volume.

Additionally, it is important to understand that as liquidity grows, it becomes harder and harder to drive the value of an asset downwards. In short, creating higher trading volume means a more stabilized price for LODE and its assets.

LODE’s Liquidity Strategy

It would be amazing if Tier 1 exchanges listed assets simply based on merit. However, exchanges are businesses and like all for-profit operations, seek opportunities and listings to bring them the most traffic and money. This is why building trading volume and audiences on decentralized exchanges (DEXs) is essential before attempting to list with major centralized exchanges.

Decentralized exchanges are financial tools that allow anyone, anywhere to list their assets and create liquidity for them. It is the first step for almost every project in crypto seeking to create trading volume.

Some of the advantages of decentralized exchanges are automated market makers, which help liquidity pools (the amount of money in a trading pair) by acting as an automated buyer/seller for individuals who want to facilitate a transaction. Also, individuals who hold LODE Tokens or other assets can add their tokens to the liquidity pool and earn trading fees on the buying and selling that takes place.

Where Will LODE Tokens be Listed?

On September 7th, 2022, LODE Tokens, AGX, and AUX Coins will begin trading on the Trader Joe DEX on the Avalanche Blockchain. As a result, LODE will bring the order book inside the LODEapp to create a simple and easy trading experience for LODE Community Members. Also, users will be able to buy, swap, and trade LODE assets on the Trader Joe DEX separate from the LODEapp.

For the first few months leading up to January 1st 2023, LODE will drive its buying and selling traffic to the Trader Joe DEX. This is important because each DEX effectively requires its own “liquidity pool”, which must be robust enough to prevent prices from collapsing. As the trading increases, buying and selling will be expanded to larger markets and DEXs.

The expansion process will begin on the Ethereum Virtual Machine (EVM) supported DEXs such as, Curve, Sushiswap, Uniswap, and more as time progresses. Once LODE has effectively created strong overall liquidity, it will begin to pursue larger centralized exchanges.

What Trading Pairs Will LODE Tokens, AGX and AUX Coins Be Listed With?

All financial markets and exchanges operate by creating an order book that exchanges one specific asset for another. This order book is a list of buys and sells between two different assets. The assets that are bought and sold for each other in this order book are referred to in economics as a “trading pair.”

LODE will launch its financial market using USDC as its trading pair on Avalanche. Accordingly, LODE’s trading pairs will be LODE/USDC, AGX/USDC and AUX/USDC. USDC is the most widely accessible currency known across all trading pairs and blockchains. USDC already has massive liquidity.

Over time, LODE will begin to add more direct trading pairs. However, it’s important to understand every trading pair is effectively its own liquidity pool. For example if you want to exchange USDC for LODE Tokens, it requires a pool of capital for both of these assets in order for trading to take place. Going to market with many different trading pairs is a substantial financial undertaking that can spread liquidity too thin and run the risk of creating instability that can collapse the market under selling pressure.

What Will LODE’s Assets Trade At?

When LODE launches liquidity, it will effectively release LODE Tokens for sale on the public market at a price in line with the bonded curve. When launched to the public, the daily trading price of LODE Tokens will be derived from the buying and selling by the community. LODE will have no control over the price its assets trade at. The free market does.

With AGX and AUX Coins being 100% backed by precious metals, the assets may trade at or near the spot price of silver and gold, respectively. However if the market believes that the asset value is higher, the price may rise above spot.

I’m an Investor. Will I be able to Sell my LODE Tokens?

The short answer is yes!

Liquidity coming to LODE Tokens means investors will be able to gain access to their assets on Avalanche and will be able to sell, hold and move them freely.

That being said, there are some caveats.

You have probably seen other projects listing their assets on exchanges only to see their value decrease immediately afterward. Early investors often flood the market by selling all of their assets at once, thus driving the market price down because there isn’t enough buying pressure to maintain the current price. In this case, its value will crash. This may cause some investors to be disappointed because they did not act quickly enough to sell. This can essentially damage a project.

To avoid this, LODE is implementing a vesting period for investors to prevent collapsing the LODE Token market value. This will allow investors to liquidate at the highest possible price.

Investors with LODE Tokens will begin vesting at 1.92% weekly beginning on January 9th, 2023. The vesting will take one full year to complete, with 100% of tokens vesting on January 9th 2024. The vesting period will allow LODE to mitigate the risks of a potential devaluation of the LODE Token, and reduce the risk dumping and flooding of the market. LODE seeks to build its market value in a sustainable manner to enable attractive conditions for investors.

Claiming and Transferring Vested Tokens

Investors will be able to vest their LODE Tokens by logging into their LODEapp. From there, investors will be able to vest their LODE Tokens by selecting — “Vest My Tokens” and a transfer will take place from Hyperledger to Avalanche. The amount of LODE Tokens vested will then be accessible on Avalanche and ready for exchanging on secondary markets.

On or after September 7th, 2022, investors buying LODE Tokens either from Trader Joe or through the LODEapp will immediately have assets available on Avalanche for trading in any compatible Web3 wallet.

To purchase more LODE Tokens and answer any remaining questions on LODE, Liquidity or upcoming initiatives, please book a call with Tom Halapatz VP of Business Development.