Maple is proud to announce the successful close of our Balancer Liquidity Bootstrapping Pool (LBP). This process distributed Maple governance tokens to over 1,000 new MPL holders and raised over $10m USDC for the protocol. It marks an important milestone for Maple as we continue down our path toward protocol launch later this month. We are thrilled to have such strong support from our early community.
Our objective for the Maple LBP was to enable a fair distribution of MPL tokens through a smooth price discovery process that minimized front-running. The proceeds have been put towards the MapleDAO Treasury and used to establish the permanent 50:50 MPL:USDC Balancer pool. When building the Maple LBP strategy, we relied on the resources developed by other projects going through this process before us. We'd like to share our insights into the LBP experience to keep the cycle of learning & experimentation going.
Final Price: $21.98
Amount Raised: $10,332,236
LBP MPL Supply Sold: 94%
New MPL Holders: 1080
Failed Transactions: 0
Bot Liquidity Fees: ~$15K
Median Transaction Size: 175 MPL
Our Process and Experience
Perpetual Protocol was the first to use a Balancer LBP for their token launch last fall and many projects have experimented with the tool since. Using the resources provided by past protocol LBPs, such as the Radicle simulations spreadsheet, we did our best to model the launch through numerous simulations, and are very happy to share that the distribution went as expected.
Ahead of the LBP launch, we prioritized educating our community on the price discovery mechanism and how to participate. We published a Guide to the Maple LBP and the team was available on Discord to answer community questions. We encouraged participants to increase their slippage tolerance to ensure transactions went through (lessons from HydraDx).
In their retrospect post, HydraDx also highlighted the need for more downward price pressure. Shifting pool weights create a downward selling pressure on the price of the token which is offset by the inflow of USDC. This ideally allows the price to oscillate around the market value. For this reason, the pool's initial composition started with 96% MPL and 4% USDC and was planned to gradually shifted to pool weights to reach 4% MPL and 96% USDC at close. However, at the end of the three day distribution, the pool weights were finalized at 5.91% MPL and 94.09% USDC. This 2% deviation from the expected final weights is due to Balancer V1 requiring the use of block times to determine weight change schedule, which can vary in duration vs. real world time.
At the recommendation of Perpetual Protocol, we increased the frequency of weight-changing calls to once every ten minutes. Participants were still able to poke weights before swaps but the increased frequency of weight-changing calls reduced the price drop for public pokes, discouraging potential attacks.
For the first two minutes of the pool, the transaction cost was 10% before falling to 0.3% where it remained for the rest of the LBP. The goal was to deter bot involvement at the early state of the pool, in the best interest of our community members. However, we still experienced an inflow of early bot trades trying to prop the price at the beginning of the distribution. Despite high frequency of weight-changing call, we did experience some bot manipulation arbitraging price as it changed weights. This is an inherent vulnerability in the LBP design. Increasing the frequency of weight-changing calls further would diminish the benefits of the poke feature for other participants. This is a trade-off future protocols can experiment with.
The Maple LBP price discovery worked remarkably well, starting high and falling rapidly as planned before finding a floor around $17. Most of the sale fluctuated between the $19 and $26 per MPL price, and we exceeded the USDC raise amount simulated in our Bull Case Scenario, while maintaining a stable price range throughout the distribution.
Token Distribution of MPL
The 1,080 new MPL token holders at the end of the LBP has now expanded to 1,226 new MPL holders in the week following the sale.
The median MPL wallet holds 113 tokens (~0.02% of circulating supply) with the largest wallet holding 14,033 tokens (2.17% of circulating supply). Total circulating supply as of May 6th, 2021 is ~645,529 MPL tokens, which is in the process of being verified and updated by CoinGecko and CoinMarketCap.
There are 137 wallets which hold ≥ 1000 MPL tokens.
Overall, the community now holds 614,748 MPL tokens (inclusive of the 5% seed unlock), with the remainder of the circulating supply allocated to liquidity in our Balancer MPL / USDC 50:50 Pool.
Transaction volume per hour during LBP
As expected, transaction volume for the LBP peaked on the last day with 309,394 MPL transacted in the pool during the last hour of the distribution. Transaction volume started out slow averaging below 50K MPL per hour for the first 24 hours of the distribution, before temporarily peaking about mid-way through at a volume of 97K MPL in an hour at 9AM UTC on April 30th. Next, there was a period of consolidation with volumes averaging below 60K MPL per hour, preceding a massive increase in volume during the last 12 hours of the distribution.
This dynamic of high volume toward the end of distribution has been common in previously executed LBP's (HydraDX, PERP), and partially drove our decision to include maximum selling pressure with target end weights of 4:96. We were pleased with the outcome of this choice, as despite the increased volume at the end of the LBP, price remained steady within the range established throughout the rest of the distribution.
Special thank you for the support and resources offered by Balancer, Hydra, and Radicle teams. Working with this new system of token distribution offers a number of uncertainties, and we are grateful for the support given by others in the ecosystem to assist our execution and look forward to seeing future experimentation in this space.