Liquidity Bootstrapping Pool¶

As part of our research into token launch methods, we have been investigating Liquidity Bootstrapping Pools (LBPs). LBPs are a type of automated market maker (AMM) contract that can be used to launch a new token.

Avalanche Subnets Summit Presentation¶

Video: Agent Based Modeling for simulating Liquidity Bootstrapping Pools

After months of research into Liquidity Bootstrapping Pools, we presented our findings at the Avalanche Subnets Summit on 2023-04-15. This presentation is a high-level overview of the research we have done so far.

Parameters for Liquidity Bootstrapping Pools¶

Report: LBP Parameters

This document presents a Hi-Plot for navigating the different configurations of parameters for a liquidity bootstrapping pool. The Hi-Plot is a tool for visualizing the results of a parameter sweep. The Hi-Plot is a 2D projection of a 3D space, where the axes are the parameters of interest. The color of each point represents the value of the third parameter. The Hi-Plot is a useful tool for navigating the parameter space and identifying interesting regions to explore in more detail.

ABM Background¶

Report: ABM Background

In this report, we use Agent-Based Modeling (ABM) to examine the performance of a Liquidity Bootstrapping Pool (LBP) under different simulated conditions. Using the Balancer V2 LBP spreadsheet as a starting point, we used the ABM to systematically sweep the parameter space of values we were interested in. The parameters used by the ABM should be roughly comparable to the spreadsheet; one can be used to test the other. Since the ABM includes stochastic elements, it does not behave the same each time it is run; consequently, each parameter configuration is simulated multiple times. The ABM does not assume a constant daily token flow rate; instead, this value is an outcome of the model. The ABM dynamics permit unexpected - or even impossible - states to emerge; consider “sanity-checking” parameter values against the Balancer spreadsheet.

MMC Scenarios v2¶

Visualization: MMC Scenarios

A first look at running an LBP after bootstrapping liquidity through the Market Making Campaign (MMC). We performed a parameter sweep of the following model inputs, resulting in 1944 permutations:

number_of_agents
- 50
- 250
- 500
- 1000
- 2000
- 5000
tokens_in_pool
- 200_000
- 300_000
- 400_000
- 500_000
usdc_in_pool
- 350_000
- 500_000
- 650_000
weight_token_start
- 0.98
- 0.9
- 0.7
weight_token_end
- 0.02
- 0.1
- 0.5
economy_size
- 1_000_000
- 2_000_000
- 5_000_000

For this visualization, we simulated 20 “parallel universes” for each permutation.

MMC Scenarios v3¶

Visualization: MMC Scenarios 0.8 start

The following parameters were used for these simulations. Each permutation was simulated 20 times.

number_of_agents
- 50
- 250
- 500
- 1000
- 2000
tokens_in_pool
- 400_000
- 500_000
usdc_in_pool
- 350_000
- 400_000
- 500_000
weight_token_start
- 0.8
weight_token_end
- 0.02
- 0.1
economy_size
- 1_000_000
- 2_000_000
- 3_000_000

MMC Scenarios v4¶

Visualization: MMC Scenarios [0.75, 0.8, 0.85] start