How To Set Your Coin Price on PancakeSwap
So you’ve just created your cryptocurrency token via MemecoinGen.com and you’re now wondering how to calculate & set the initial price on Pancakeswap.
Creating a Liquidity Pool
First things first, a liquidity pool must be made. If you don’t know how to set one, read How To List Your Coin On Pancakeswap for some background info.
Assuming you have read the above & you are familiar with creating liquidity pools, let’s get straight into it.
How The Initial Token Price is Determined
The initial token price PancakeSwap is determined by the ratio at which you supply tokens to the liquidity pool.
When you provide liquidity, you provide the 2 assets to which Pancakeswap will determine as equals. This should be your token and a certain amount of BNB or a stablecoin.
Remember the token you’ve created has no value until the Liquidity Pool (LP) is provided hence it uses what you provide to determine the initial price.
Ok So How Do I Work it Out?
Let’s say you provide 1000 BNB and 1000 of your token to create a liquidity pool for your token to be traded.
To find the price for your token, divide the BNB or stablecoin amount by the token amount to get the token amount. then divide the token by the BNB or stablecoin to get the other side of the price.
Let’s look at an example…
1000 BNB ÷ 1000 TOKENS = 1 Token
1000 Tokens ÷ 1000 BNB = 1 BNB
This leaves you with an initial price of 1BNB =1 Token.
Usually in crypto we are dealing with some bigger numbers so let’s look at something abit more complex
A More Realistic Example
So let’s look at a more complex example.
Let’s say you provide 10,000 USDC and 1,000,000 Tokens.
Divide the USDC by the token amount to find how much 1 token can buy
Divide the tokens by the USDC amount to find out how much 1 USDC can buy.
If you are using BNB or something else instead of USDC, the logic works the same
Why is knowing this important?
If you are planning on having presales, you need to know what the initial price on an exchange will be as you don’t want to disadvantage your presale investors by messing up the initial price.
If you have ever bought into a presale where the price is above the price it got listed for on the DEX, miscalculating this is why.
Can I use a small amount of liquidity?
You can but do note that price will fluctuate heavily. Perhaps that is what you want.
Why would the price change on the first purchase?
When you make a swap, you change the token balance in the liquidity pool. When you buy a token, you remove that token in the LP and add BNB or USDC etc. This increases the price of the token as there is now of it in the LP.
How can I control the price after its on the market.
There isn’t much you can do as the price is set by demand and supply. Saying that, here are a few measures to help launch a better campaign.
Set a price floor
This ensures the price can not fall below a certain value. How do we ensure this? By adding all the tokens to the LP. That means there are no other coins to dump on the market causing the price to fall. If you don’t want to put all the coins in the LP, be thoughtful about the effect of price when coins outside the market are dumped. In general, post market investors prefer that most tokens are added to the LP
Lock the LP
This ensures that you as a coin creator can’t run away with the funds and will provide a much more stable market condition for your token.
Burn Tokens
This helps to remove the amount of coins in circulation, by reducing the supply and in theory it should increase the price. This might not be the most effective way to control the price.
Token BuyBacks
This uses trading fees generated by the LP or tax fees generated by trading to buy tokens from the market. The tokens are then burnt. This is good because it puts money back into the market LP and reduces supply of the token. Binance are famously known to do token buybacks which have really helped its price increases over the years
Extra Reading:
I hope this article helped you on your coin creation journey. Feel free to get in contact on twitter or telegram for any help! (Twitter & TG: @memecoingen)
Thanks for reading!
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