Kylin Token Launch: Phase 2— Liquidity Bootstrapping Pool (LBP) on Balancer

Smart Contract: 0x67B6D479c7bB412C54e03dCA8E1Bc6740ce6b99C

→Audited February 28th, 2021 by the Certik Foundation with 0 critical, major, and/or minor issues. Our contract address also has Certik Shield Coverage.

Token Launch Schedule

The KYL token launch schedule will: Begin on March 1st and be completed by March 5th.

PHASE 2 : LAUNCH — Balancer LBP (March 3rd-March 5th)

  • ~13M KYL tokens from the Public Sale will be distributed (unpaused) to Balancer’s Liquidity Bootstrapping Pool (LBP) on March 3rd at around 10:00 am UTC.
  • The LBP will run for 48 hours, starting from 10:00 am UTC March 3rd, and ending at 10:00 am UTC March 5th. The weight of Balancer Pool will be adjusted according to the market buying power. This is dynamic!
  • This round is open to anyone. As previously discussed, the Balancer LBP is not like a regular Balancer pool. The price will start very high to disincentivize bots, front-running and speculation. Over time, the price will automatically decrease by design.
  • Below is a graph that shows the KYL:USDC pool weight starting at 95:5 (with a high KYL price) and declining to 50:50 (lower KYL price) over 48 hours. The end price is $0.05 per KYL. The Balancer LBP table can refer to the KYL LBP Calculator.
  • NOTE: these graphs assume no buy/sell orders, the price will very likely fluctuate at variance with the below models as we expect buying pressure to occur. The models below are only an illustration of the basic operation of the LBP function.

LBP (Liquidity Bootstrapping Pool) is a variant of dutch auction or reverse auction. Its price will drop if no one buys as time progresses. Please learn how it works before participating in LBP and stay within reasonable price ranges. Don‘t FOMO. Balancer changes the weight of its predetermined pool weight to push the price down if no participant is buying.

There’s an interesting video on youtube explaining how it works here (with reference to the APY.finance LBP specifically, though using a 90:10 ratio and USDC).

$KYL LBP Key Parameters

$KYL Token address: 0x67b6d479c7bb412c54e03dca8e1bc6740ce6b99c

LBP Pool Address: https://pools.balancer.exchange/#/pool/0x58ad69d1306a2410622d0e3f707c8f1dd0185c49

Reminder:

  • Due to the mechanism of reverse auction, the price will trend down automatically if no one buys. The declining slope is the steepest at the very beginning. Stay rational before any trade decisions!
  • The default max slippage is 0.5%. Set it higher if you are buying with a relatively large order.

BEFORE YOU EVEN GET TO STEP 1

For those who are using a DEX for the first time (in this case, Balancer):

NOTE: that it may take two transactions to make a trade

  • First you have to unlock the USDC token for trading on Balancer
  • And then you need to swap for KYL.
  • You will have to click the button and navigate to Metamask twice

STEP 1

Ensure you get yourself some USDC. USDC is a stable token on Ethereum, each USDC = $1. The Kylin LBP will be paired with USDC. (If you use another asset to exchange this could increase tx fees.)

***At any time after the Kylin LBP begins March 3rd around 10:00am UTC:

Navigate to the USDC/KYL Swap page here:

STEP 2

  • Connect your wallet. We suggest Metamask. If you don’t have Metamask, get it.
  • Follow all the prompts and be sure you have enough gas (ETH) for the transaction to complete.
  • Once the transaction completes you will be among the very first owners of KYL!

WARNING — LBPs and timing

This is probably unlike any other sale you’ve ever done. Unlike in, say Uniswap, where two assets in a pool have equal weight, in LBPs the weights of the assets can be changed over time, hence, we ‘bootstrap liquidity’.

As noted above, it is important not to jump in too early. Stay rational. If you feel the price is too high, wait a few minutes or longer until it reaches a value you think is correct.

Unlike a standard pool, there are two main methods by which the price can change: 1) there is a constant downward pressure on the price from the variable weighting, but 2) in concert with this is that the price will get a ‘bump’ every time someone sends USDC to the pool in exchange for KYL.

WARNING — LBPs and price discovery

You will need to understand that when you swap USDC for KYL in a LBP pool, you essentially are ‘naming your price’.

Although we have a starting price, of $0.95, this does NOT mean that KYL has been valued at $0.95!

This is essentially a placeholder starting point at a 19X (95/5=19) valuation to the public sale price of $0.05 that should help prevent bot front-running prior to the weight function kicking in.

We repeat, do not confuse the starting price with a proposed token value!
In other words, if everyone does nothing or, overall, adds very little liquidity when the LBP starts, the price will naturally fall, and fall fast.

This is why it is so important in an LBP to stay calm and not FOMO.

Over a certain time period, it should become more and more clear the price basis of KYL, which is why it is further recommended not to ‘storm the gates’.

In simplest terms, the LBP puts a lot of agency in the hands of the participants to work dynamically and most importantly — organically — toward a methodology/system of price discovery with hopefully a more rational and human basis than other ways.

Subsequent to the LBP ending, the token price will be set in the Uniswap pool, which represents the 3rd and final phase of the KYL token launch.

Lastly, good luck!

APPENDIX— Some modelling

Thanks to community member @donallmc for putting some of these potential simulations/scenarios together (which are outlined here for purely educational purposes and are not an indication of performance during the LBP). His code for this can be found here:

https://github.com/donallmc/lbp_sim/

As can be seen, there are a variety of scenarios one can imagine that will turn entirely upon human engagement and how it ‘all plays out’. The certain pattern between each model, however, is that the initial spike is likely to be a very strong predictor.

About Kylin Network

Kylin Network aims to build a cross-chain platform powering the data economy on Polkadot. It will be the data infrastructure for the future DeFi and Web 3.0 powered by Polkadot. Kylin Network will provide valid, reliable, secure, cost-effective, and easily-coordinated data sources and data analytics.

Contact Kylin Network

Building a Cross-chain Platform Powering the Data Economy on Polkadot

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