Value to Token Projects

AMMs have found product market fit and become a formidable alternative to CEXs. More and more token projects want to list their tokens and provide liquidity on AMMs. For most long-tail, tail, or torso tokens, AMM is the only viable solution since CEXs won't list them and the cost of hiring pro market makers can't be justified. Even for top tokens that can be listed on CEXs and can afford to hire pro MMs, they also want to list their tokens on AMMs along side CEXs.

The Problem - Liquidity Challenge

Since AMMs are permissionless, listing on AMMs is literally free. And from technical operation point of view, creating the initial AMM LP pool and provisioning liquidity is simple and straightforward. But the AMM design creates a big pain point for token projects. To create an AMM LP position and increase liquidity, token projects don't have the capital (e.g. stablecoin, WETH, WBTC) required to pair with their tokens even though most projects have tons of token sitting in the treasury doing nothing and earning nothing. Token projects face liquidity challenge which is a big narrative in crypto.

Existing Solutions

Currently, there are two categories of approaches that token projects use to solve their liquidity challenges:

• In one category, token projects beg their VC investors for support since they have abundant capital that are not utilized. Since investors have invested in those projects, they have incentives to supply liquidity so as to make projects successful. Unfortunately, not every project has big sugar daddies and not every VC is setup to support on-chain liquidity.

• In another category, token projects use token inflation to incentivize AMM LPs, e.g. the so called yield farming or liquidity mining. The reality is that mercenary capital immediately leaves after the incentives stop and dumps project tokens which cause the token price to collapse. From the tokenomics design perspective, yield farming is not long-term sustainable and the market has shown that.

Double's Solution

In Double's design, token holders effectively lend their unused project tokens to capital providers for free. They forfeit the yields earned by LP positions as incentives to attract capital. This solution is much better than existing solutions:

• Token projects can attract capital not only from their VC investors but from any 300k+ AMM LPs, either retail or institution. This could not be done without using smart contract technology to scale the offering of a commercial agreement to 300k+ entities.

• There is no token inflation to incentivize liquidity and no worry about token price drops. Projects forfeit the AMM LP yields which they should not care. Any project except AMMs that depend on AMM LP yields as revenue will be dead anyway.

• The model used in Double's solution has been widely used by projects to work with pro market makers on CEXs, where projects lend tokens to pro market makers like Jump, Wintermule, etc. With Double, projects don't need to rely on few pro MMs and can collaborate with a much bigger partner base of 300k+ AMM LPs.

Unused Tokens - Earn Incentives?!

Except a few tokens, most project tokens are not being used or could not generate any yield. Even though token holders forfeit the AMM LP yields, but by depositing their unused tokens into Double, they can earn Double's incentives - Double Dip Joy (DDJ). DDJ has no pre-mine and more importantly, has strong utility inside Double and hence strong market demand.

Different from other incentive programs, Double's incentive program allows any project token to earn incentives from Double due to its innovation - Liquidity Mining 2.0 (LM2). Have you heard anything remotely similar? Let us know.