Yesterday, YFI founder Andre Cronje published a new article “Encrypted Economy, Permanent Liquidity, and Offset Loss of Impermanence”, which mentioned a new token model LBI. According to AC’s own introduction, the purpose of the token It is to offset the problem of impermanent loss faced by AMM through liquidity governance.
In view of the success of YFI, many participants bought this new token blindly, as stated by Stake Capital CEO Julien Bouteloup:
“People are now entering LBI (liquidity income), in my opinion, it’s like an instant crash mode… The token price dropped from $1344 to $0.3 in a few seconds, people are actually dumping a lot of ETH , And sometimes received a small amount of LBI, and they suffered miserably because of the joint curve.”
In just 14 hours, LBI’s transaction price on Uniswap has fallen to $0.0045, and the word “miserable” is not enough to describe.
It plummeted by more than 99.9% within one day. What kind of “sinkhole” is this LBI?
According to data provided by etherscan, the current total amount of LBI is about 99,986,800, and its token holding addresses total 272, and 93% of the tokens are concentrated in the token pool of Uniswap V2.
What exactly is LBI?
According to Andre Cronje’s own introduction in the article, LBI, as a liquidity token, has two basic purposes:
Generate as many transaction fees as possible;
Try to offset the impermanence loss;
How was the first goal achieved? AC explained:
“My newly designed liquidity token has a constant K value (Uniswap) joint curve to mint tokens, but it is not burned. All liquidity used for minting tokens will be automatically provided to Uniswap trading pairs. Doing so The end result is that when a purchase transaction occurs, the price of the token pair on Uniswap increases, and the price of the curve also increases.”
The second purpose is to merge the conventional pool 1 and pool 2 designs into the same design structure and create arbitrage incentives for traders.
According to AC’s code rules, about every 7000 blocks (approximately 24 hours), 1% of the total tokens will be allocated to liquidity providers.
Simply put, the way to obtain LBI is to provide liquidity and market making on Uniswap.
Seeing this, it is estimated that many defi players may be excited, but many people automatically ignored the last sentence mentioned by AC in the article:
“These contracts are for research purposes only and should not be used for other purposes.”
A similar reminder appeared before when AC launched YFI, but this time it did not serve as a warning.
AC’s update response
After the price of LBI tokens experienced a sharp drop, AC himself had to update a note at the beginning of his article:
“This is 100% worthless. It is not in the meaning of meme, because this is an experimental concept that needs further development and cooperation. This will not be used in the future. It will not be used except to create a permanent distribution pool. Do anything else. This is shared with developers to help thinking, and then figure out how to create this new allocation mechanism. Don’t invest money in it, I promise, I will create something that allows you to use the funds, But it (Translator’s Note: refers to LBI) is not.”
What do you think?
