LBP Analysis

Looking back at the xHDX Balancer LBP

The LBP blew our minds. We did not expect such participation and are thankful for the support from our Hydraheads. As mentioned many times before; the goal was to distribute the stake in the network as soon as possible. We could not have imagined the extent to which it will be accomplished.

An LBP is a nuanced thing. We would like to share an insight into what has happened during the HydraDX LBP, what our thinking was before, and what it means for the future of such a distribution. We expect that more teams may choose this path in order to distribute stake in their networks.

LBP Stats

Let us recapitulate some quick highlights that we shared in a Twitter thread:

The final price of xHDX is $0.08059. A total of 22.9m DAI has been raised as the initial liquidity for the HydraDX chain (of which 430k+ in fees). 87% of xHDX from the pool have been sold and the remaining 13% of xHDX (0.65% of total supply) will be moved to the HydraDX treasury.

We are happy to report that xHDX is held by 5274 addresses. This is a pretty amazing feat given that we have not actively marketed the LBP. The team has not spent any funds on advertising despite being approached by countless marketers or "influencers". This has been achieved organically thanks to our amazing community.

Holders: 5274 (nonzero balance)
Buyers: 5491
Buys: 8805 (failed 1780 ~20% !!)
Tried to buy but failed: 221
Gas spent on buys: 324 ETH
Lowest price: 0.0322
Highest price: 0.0846

We could not bear the blood, sweat and tears that was spent on gas so we have come to a decision to reimburse gas costs spent on "buys" and UX problems leading to "failed buy transactions" with xHDX. There is a governance proposal regarding what exactly should be reimbursed on HydraDX Discord right now.

How did we approach the LBP?

As mentioned before; we have drawn lessons from the Perpetual Protocol LBP. The findings from Perp's LBP we have implemented:

  1. setting a high(ish) transaction fee (0.9%)

  2. increasing the frequency of weight change calls

  3. not setting the initial price too high

We knew that an LBP is a risky endeavour. We had an option to do a private sale and actually raise funds. The goal of the LBP was not to raise funds but to distribute the HDX. The funds spent on HDX will be used as an initial liquidity for the HydraDX pool at mainnet launch.

We were not able to factor in the market mood and the interest in xHDX LBP. We have considered the project relatively under the radar and have underestimated the "purchasing power" of Hydraheads (TBH our estimated high-end extreme case scenario was 10m DAI).

The market has priced xHDX way above our expectations or wildest dreams. Given that we were doing an LBP during an ongoing bull market, we had suspected that there would be an interest, however, we had underestimated the interest. Nevertheless, we have tried to provide useful tips and guidance on how to best approach the LBP (published HERE).

We have warned people not to ape in too early or too late:

The general takeaway was to wait until the price drops!! Alas, someone was able to slip in a buy transaction even before the LBP was officially launched.

We actually thought that this FOMOsaurus would get rekt and, again, have warned people to take their time.

We have learned that albeit an intriguing and relatively fair way to distribute tokens, LBP presents a very unpredictable mechanism given the rapid sentiment swings. The new learnings and recommendation based on our LBP experience are following:

  1. accurate estimation of sale rate is a key

  2. fees could be set even higher

  3. educate buyers about slippage settings to reduce the number of failed buys

Conclusion

In general we are very happy that we have fulfilled the goal we have set out at the beginning and have achieved a wide xHDX distribution. LBP is a useful tool which will probably invite more experimentation in the future. The price of xHDX is an indication of what Hydraheads expect from us.

The ball is in our court now. In the next two weeks we will be working hard to deliver the HDX claim mechanism and the Stakenet.

Stay hydrated Hydraheads.