Everything You Need to Know About Skyward Finance Before the First Token Sale
Skyward Finance is the premier launchpad built natively on NEAR Protocol. On June 24th, Skyward Finance officially went live on the NEAR mainnet after concluding a successful test sale. The anticipation for Skyward Finance was so high that NEAR’s daily transactions hit an all-time-high while Skyward was on testnet.
The first event marking the launch of Skyward Finance is the initial token sale of $SKYWARD — the native utility token on Skyward Finance. Before you get in on the sale, which lasts for a week starting on July 1st, you would want to know what all the hype is about. Here is everything you need to know about Skyward Finance to get you started.
Skyward’s Innovation: Time-based Open Auctions for Token Launches
Skyward’s proposal is to make token launches open, fair, bot and attack resistant, community-oriented, and truly decentralized. The two founders of Skyward Finance — Spensa Nightshade and Doomslug — are seeking to solve the problems plaguing token launches today. On the one hand, most tokens are offered to venture capitals and private investors first, and then to the general public. This imbalance has often led to unfair situations, like when insiders “pump and dump” a coin onto the general public. On the other hand, the current models for token offerings “are vulnerable to front-running bots, sybil attacks, multi-account registration.”
Skyward provides the answer to these problems through “streaming time-based auctions”. What this means is that a project launching on NEAR through Skyward Finance would:
- Create a market between their own tokens and any other token they want ($NEAR, $DAI, $USDT…)
- but split the token distribution over a series of sales which last for a set amount of time
- which will be spread out over a specific period of time.
Skyward’s own token sale demonstrates the model all future projects will take when they launch on its platform. From the picture we can see that $SKYWARD can be purchased in exchange for $NEAR. There is no other requirement to participate other than having some $NEAR in your NEAR wallet.
Each $SKYWARD sale lasts for a week and is split over 6 sales in total. That is, there is a week-long sale of $SKYWARD tokens every month from July to December. The first sale offers 25% of the total supply; the second 20%… and so on, reaching 90% of the total supply by the last auction.
What is the $SKYWARD token?
$SKYWARD is the native utility token on Skyward Finance. Unlike some other launchpads, it is not necessary to hold $SKYWARD in order to participate in Skyward, either as a seller or a buyer. Instead, $SKYWARD represents the holder’s share in the Skyward Finance Treasury. The Treasury, in turn, is the pool that collects all the fees for the use of the Skyward Finance platform.
As Skyward Finance makes clear in this tweet, the Treasury collects all the proceeds from the $SKYWARD sales, as well as a 1% fee from all sales on the platform. A $SKYWARD holder can redeem their token through the Treasury. For more explanation of how the Treasury works, see this thread.
The Price Discovery Mechanism of Skyward Finance
As an auction mechanism, token prices on Skyward are determined by demand and are not fixed beforehand. This means that rates are dynamic and can even change during the sale.
From the buyer’s point of view, a sale will look like this (I will use the $SKYWARD token sale as an example, but the structure applies to all other sales on Skyward):
1) You are interested in purchasing $SKYWARD. You deposit, for instance, 100 $NEAR into the contract for the sale before it starts.
2) You will see that depending on the demand, the expected swap ratio for $NEAR : $SKYWARD will change.
On June 28th, 118,197 $NEAR tokens were deposited for the first sale on July 1st. This made the expected rate 1 $SKYWARD = 0.472767 $NEAR. As of June 29th, 256,205.7 $NEAR tokens have been deposited, making the expected rate 1 $SKYWARD = 1.024822 $NEAR.
3) Once the sale kicks off, your deposited $NEAR will automatically change into $SKYWARD. But instead of getting your total sum of $SKYWARD at once, you will accumulate $SKYWARD throughout the entire duration of the sale. This is because the auctions for $SKYWARD occur per block, which is about 1 second. On your screen, you will see the amount of $SKYWARD received continuously go up. You will have received the final amount corresponding to your total deposited $NEAR by the end of the sale.
4) Once the sale starts, you can immediately start to claim the $SKYWARD you receive. Click “Withdraw” and you will have it in your wallet.
5) As the sale goes on, new people can join, while existing participants can modify the amount of $NEAR they commit, or withdraw from the sale altogether. Hence, it is called a “streaming auction”.
6) Because the total demand for and remaining supply of $SKYWARD can change at any time, the price of $SKYWARD can also change throughout the course of the sale. As your $NEAR is gradually converted into $SKYWARD, the rate will be determined by the demand at the time of auction.
7) After 7 days, the sale ends.
We thus see that on Skyward Finance token distribution is split over time, and the auction itself is split over the duration of a single sale. Because the sales are not instant, bots simply do not have an advantage over human buyers in terms of reaction time. This is why Skyward claims that its price discovery mechanism is bot-resistant.
Additionally, this mechanism prevents price manipulation schemes (“pump and dump”) because (1) Skyward does not allow you to immediately resell the token in the same pool, and (2) since prices are dynamically determined by demand, withdrawing your order to artificially pump a price will actually drop the price compared to what you initially paid. This is why Skyward claims that it allows for fair token launches and price discovery.
- You can raise capital in any token: you choose the token you want to receive from the sale
- You can launch multiple sales simultaneously for different tokens
- The automated token auctions offers a no-fuss, hands-off solution so you can keep building your product while raising money
- You can launch your token with 0 liquidity
- Anyone can create a sale since there is no requirement to hold $SKYWARD
What Can We Expect Next?
After the initial token sale spanning from July 1st to the 7th, five more $SKYWARD sales will occur in the following months. At the end, 90% of the total supply (of 1 million tokens) will have been distributed to the public.
According to the co-founder, Spensa, the immediate next step is adding the Treasury redeeming feature. Soon, $SKYWARD holders will be able to claim their share of the Treasury balance based on how many $SKYWARD tokens they hold against the total circulating supply. In addition, we can expect to see several projects launch on Skyward in the near future.
Join the Skyward Community
For further details, reach out to the community and team of Skyward Finance!