Token & Treasury Divestments

Discover how Fjord can support sustainable token divestment of token assets

It is a common occurrence for projects and DAOs to hold the tokens of another project in their treasury via a partnership or agreement. In other instances, there can be donations made of tokens to a particular charity or group or there may be a need to generate liquidity for tokens held in the treasury. However, it can be very difficult to divest these tokens in a way that does not harm the market and/or community for that token. In addition, it can be a time consuming process to undertake this endeavour constantly.

We’ve seen many projects give large portions of tokens to well known groups and figureheads. Vitalik Buterin received trillions of Shiba Inu tokens while Gitcoin also received trillions of Akita Inu tokens via Vitalik ($5 million USD in value).the Gitcoin community was left with a comparable conundrum and questions. What was the most efficient, fair and appropriate way to maximize the sale value of the tokens while not causing an immediate and negative impact to the token price and the AKITA community?

The answer for Gitcoin turned out to be a Balancer Liquidity Bootstrapping (LBP) Pool created and hosted by Fjord Foundry.

The price decay mechanics of an LBP allow for true price discovery, and for price decay to occur via weighted pools over a time duration that can be customized to the LBP owner’s choosing.

In the instance of Gitcoin, the LBP has been scheduled over a period of 365 days, ensuring a supply shock does not instantly crash the price of the token.

Additionally, the Fjord platform allows for both buying and selling of AKITA, so the price is able to generally keep equilibrium with the current market price available on alternative exchanges, with some savvy traders able to take quick advantage of any arbitrage opportunities that may arise from any price discrepancies.

Due to the slow price decay over a long time horizon and the arbitrage opportunity, the main token of the LBP, in this case AKITA, is slowly absorbed by the overall crypto market in exchange for WETH without a drastic impact to AKITA price.