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Author: Admin | 2025-04-28
Nature however there is a major problem associated with their use for token generation events. Let me describe this for you-When it comes to creating a market for a new token, constant product pools put users in a rather unique position wherein they must choose the pricing level at which they wish to provide their initial liquidity. There are two scenarios-When the price is too high- a large amount of capital needs to be provided to the pool accompanied by the risk of having lesser buyers as well as low token float.When the price is too low- unfair market manipulation and network congestion are common as early traders, bots, and crypto whales tend to have an upper hand.Bots are notorious for their infiltration. They operate at speeds that are much higher than real investors and these are capable of making purchases at the lowest price and then dumping on the actual supporters. The constant monitoring enables these to make truckloads of money at the expense of the community you’re actually targeting.This is where Liquidity Bootstrapping Pools come into the picture eliminating the concern over unfair token distribution towards the bots.The solution to a recurring problem- Liquidity Bootstrapping PoolsHow LBPs work?LBPs increase trust in the token launch by eliminating bot manipulation and creating a fair launch for everyone regardless of their portfolio size. They’re designed to safeguard the reputation of new projects, gain a competitive edge over bots and prevent whales to profit through rug pulls or other manipulation techniques. The operating mechanism of LBPs entails adjusting the weight of the two tokens in the pool. In other liquidity pools, tokens are required to maintain a set ratio of 50:50. A weighted pool proves advantageous as it allows for a high initial price with minimal up-front capital. LBP controller needs to
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