Fixed Swap Pools will maintain the token price throughout the sale until the initial supply is bought.
Polkastarter, a decentralized exchange on the Polkadot platform, is launching a mechanism for crowdfunding, with several projects lined up to offer token sales through the platform.
Through a so-called “Fixed Swap Pool”, projects can list their tokens and set up a pool with a fixed per-token purchase rate.
The product will go live on Dec. 15, and three projects will be using the platform to raise funds in the first three days of launch. These include two decentralized autonomous organizations, SpiderDAO and MahaDAO.
Initial Decentralized exchange Offerings, or IDOs, first came into existence in the second half of 2019, although at the time, decentralized exchanges, or DEXs, had yet to gain much traction in the market. With the explosion of decentralized finance in 2020, DEXs increased in popularity, and IDOs became an inexpensive way to get around the centralized initial exchange offering model.
However, to launch an IDO, a project needed to provide liquidity of both the sale asset and the quote currency for it to trade against. Automated market makers would then adjust the sale price of the token throughout the sale, depending on supply and demand.
This allowed whale investors to “ape in” by upping gas fees and buying out entire pools of newly created liquidity in an attempt to secure lower-priced tokens.
Polkastarter will allow projects to list at a fixed price, which will be maintained for as long as there are tokens remaining in the original supply. This should ensure less volatility around a token launch.
It also allows a project and its investors increased transparency over the amount of money raised and tokens sold. This data is not as easily calculable when the tokens sold varies greatly with price volatility.
Polkastarter will also provide additional tools for projects wishing to fundraise, including the provision of Anti-Money Laundering and Know Your Customer compliance. These tools will not be mandatory but will be available if projects require them.
The Polkadot ecosystem on which Polkastarter runs recently announced its own DeFi Alliance with the oracle network Chainlink among its founding members.