Before we delve into this topic, we must first know what an LBP is all about. Okay, so the term is an acronym of “liquid bootstrapping pool.”
What is a Liquid Bootstrapping Pool?
This is a contract which administrates major token pools and compiles all necessary tools to be used on an exchange. Liquidity bootstrapping pools (LBPs) are also known as “Configurable Rights Pools” or “Smart Pools”.
LBPs help individuals and institutions benefit from even the earliest investments into cryptocurrency projects. They enforce and improve upon liquidity in special pools which supply resources or store resources for future use on a decentralized exchange. They are open to whoever is interested in getting involved, paying no attention to the amount of investments or assets you own — and it doesn’t matter if the amount is large or otherwise.
LBPs secure your assets and investments, since it bootstraps them (as in, makes account of them, by measuring those assets or investments); they also help in price discovery.
Comdex uses liquidity bootstrapping pools to administer other pools, in order to create liquidity for everyone. (Liquidity is the ease a person or institution gets when trading an item or items in the market.) Therefore, Comdex, in an effort to boost liquidity, makes use of liquid bootstrapping pools. In view of that, Comdex’s liquidity bootstrapping pool was likewise launched December 2021, on Osmosis.
In an LBP, projects offer their tokens and enlists a pool whose token sizes are based off on preconceived highest prices. This then means that the deals will start from the highest prices down to the lowest. In like manner, when Comdex launched its CMDX price discovery on Osmosis, a “reverse dutch auction” was held.
What is that? — - It means a reverse of the normal procedures in which auctions are held. A normal auction would start with a high price and that price would increase based on its value. However, the price discovery auction of Comdex’s CMDX tokens on Osmosis started with a high price and was gradually reduced till the pool balances of both tokens were of equal value.
The Comdex platform says dutch auctions enable the hinderance of those large CMDX owners to try gaining control of or monopolizing the market, or dumping their tokens in the future. It might as well be the best way of gaining indiscriminate price discovery and large circulation of tokens, at the same time keeping malicious bots off the grid.
How Does Comdex Make Use Of LBPs?
In liquid bootstrapping pools, the ration of two assets in the pools automatically adjust at certain periods over a certain timeframe, in order to boost price discovery. The size of assets in these pools automatically reduces, letting prices fall for buyers who buy at the price best convenient for them.
Moreover, when the price falls, a large number of people will participate in the CMDX pools, and the process will continue until all assets are sold. Thus is a unique idea drafted by the Comdex platform.
When price discovery comes to a close, a graph will show a long sales curve in which the highest price is seen to be at the beginning of the dutch auction processes. You, as a buyer, can likewise wait patiently — and it may not be long — for the price to fall to an amount you can afford.
Thus is what price discovery in a liquid bootstrapping pool is all about.
But Why Must LBP Be Used?
As all the details above have been explained, it is easy to discover that LBPs provide price discovery for people who cannot afford higher prices than what they can include in their crypto budget..
This does not only gave a positive impact on Comdex users, but also the platform itself.
Trading and transactions lead to frequently changing prices, and the losses crypto traders and buyers alike incurs is based off the sizes of the pools they are involved in. So, larger price regulating liquidity pools are the best option, you may definitely agree.
In summary, Comdex sees that for a successful crypto project to be possible, lower income users and investors need to be welcomed; and the reason is evident. Hence, they strive their best in making sure all users have access to the platform’s official governing token, CMDX, clearing all hinderances linked with other non-LBPs.
And you are one of their targets.
Comdex is a decentralized synthetics protocol in the Cosmos crypto network; and as a product of the Persistence platform, Comdex develops possible solutions for the decentralization of finance (DeFi) by handing over to investors the knowledge about a widened scope of asset classes and rewarding projects.
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