Fixed swap pools will keep the token price stable until the original offer is bought out.
Polkastarter, a decentralized exchange on the Polkadot platform, is launching a mechanism for crowdfunding.
Several projects are already available for token sales via the platform
Projects can use a so-called “Fixed Swap Pool” to list their tokens and set up a pool with a fixed purchase price per token.
The product is scheduled to go online on December 15th. Three projects will use the platform to raise funds in the first three days after launch. Two of them are the decentralized, autonomous organizations SpiderDAO and Bitcoin Circuit.
Initial Decentralized Exchange Offerings, or IDOs for short , first appeared in the second half of 2019. At this point in time, decentralized exchanges (DEXs) had not yet gained much momentum in the market. With the DeFi explosion in 2020, DEXs became increasingly popular and IDOs became a cost-effective way to bypass the centralized model of Initial Exchange Offerings.
However, in order to launch an IDO, a project had to offer liquidity for both the sales value and the currency it was to be traded against. Automated market makers then adjust the selling price of the token throughout the sale based on supply and demand.
This allowed whale investors to “hook up” by driving up gas fees and buying up entire pools of newly created liquidity in order to secure cheaper tokens
Polkastarter enables projects to be listed at a fixed price that is retained as long as there are tokens in the original listing. This should ensure less volatility when introducing a token.
It also allows a project and its investors to be more transparent about the amount of money raised and the tokens sold. This data is not that easy to calculate when the tokens sold fluctuate so much.
Polkastarter will also offer additional tools for projects that want to raise funds. Anti-money laundering and identity verification measures are also observed. These tools are not mandatory, but are available when projects need them.
The Polkadot ecosystem that Polkastarter runs on recently announced its own DeFi alliance . The oracle network Chainlink is also among the founding members.