Liquidity Bootstrap Auction (LBA)
This Page will describe, in detail, how the LBA will work. For visual learners, we have a preview of what this will look like at the bottom of the page!
The LBA has been architected to create sustained liquidity and eliminate "dumping"
ETHOS will be launched via a two part process: an extended airdrop and a liquidity bootstrap auction ("LBA"). The airdrop will be divided into two parts: the initial airdrop, which by default comes with a small portion unlocked in the beginning followed by a twelve month unlock schedule and a twelve month cliff, and the extension, in which users can extend the cliff of their airdrop in order to earn rewards based on their usage of the core software during the extension period.
The Recovery Airdrop is a way to help make Voyager and Celsius creditors "whole" again.
As of the time of writing, the airdrop will be distributed as follows:
- Up to 1.84% to self-custody VGX Holders as of the Snapshot date of November 14 2022, distributed pro rata based on holdings. Formula: user’s VGX Holdings / total VGX Holders
- Up to 12.83% to Voyager Creditors, distributed pro rata based on claims
- Up to 4% to Celsius Creditors (first 200,000 claimants each get up to 1,000 tokens based on the claim schedule found on the next page)
The maximum amount being distributed in the airdrop is 18.67%, with 20% unlocked at the time of initial airdrop.
- Default lock schedule:
- 20% unlocked at airdrop event
- 12 month cliff, followed by a 36 month linear vest thereafter
- Users will have until January 31st, 2024 to register for their airdrop reward and until March 31st, 2024 to claim their airdrop in the app after the LBA (according to the schedule on the next page)
The LBA is a token lock mechanism engineered to drive price discovery and liquidity.
- A Liquidity BootStrap Auction incentivizes capital to be deposited into a liquidity pool that an automated market maker uses to market make the bids and asks on a decentralized exchange.
- Duration of Ethos's LBA: 7 days
- Lock up for initial depositors: LP is not withdrawable for 3 months after deposit
- ETHOS rewards (equal to 1% of the total supply) goes to participants weighted by their participation in the LP pool, distributed at the end of 3 months
- This reward pool is split evenly between ETHOS and USDC suppliers. A reminder to users: with single asset liquidity provisioning the software immediately swaps half of the deposit for the pair-asset
- I.E. if there is 100 USDC in the pool and if you deposit 100 ETHOS, your LP share is 50 ETHOS-50 USDC, not 100 ETHOS
Full details on the mechanics of the LBA:
1) Liquidity Bootstrapping Auction (7 days long)
a. Airdrop recipients can deposit their ETHOS tokens and/or their USDC into an ETHOS-USDC liquidity pool. Upon pool launch, anyone can purchase ETHOS by depositing USDC (pool gives you an LP share representing an equal weight of ETHOS and USDC).
b. Participants will get a deposit token representing their share of the LP pool. This may be accepted as collateral on third party money markets
c. These funds are redeemable when the users’ lock expires
d. ETHOS deposit period:
i. Only during the first 4 days
e. USDC deposit period:
i. Allowed during the first five days, not on days six or seven
f. Withdrawal period:
i. Only USDC can be withdrawn, not ETHOS
ii. Unlimited USDC withdrawals during days 1-5
iii. Day 6: withdrawals limited to 50% of position
iv. Day 7: withdrawals linearly drop from 50% to 0% over 24 hours.. i.e. reduces by approximately 2% per hour
v. Users will be able to make only 1 withdrawal transaction during days 6 and 7.
g. Lockup period: 3 months
h. Rewards for LBA lockup period:
i. An additional 1% of ETHOS supply split evenly between ETHOS and USDC depositors.
2) Post LBA, the pool will be migrated to a liquidity pool Preview of the ETHOS LBA Website: