What is Token Launch Auctions (TLA)? Overview of TLA . fundraising

What is Token Launch Auctions (TLA)?

Token Launch Auctions (TLAs) is a form of issuance or distribution of fungible tokens by projects. Token Launch Auctions is built on top of Balancer’s LBPs (Balancer’s Liquidity Bootstrapping Pool) feature. In there, Liquidity Bootstrapping Pool is a Smart Pool, with the function of changing the proportion of tokens in the Pool according to a predetermined time.

Example: USDC-ATH Pool

You create an LBP named USDC-ATH with the initial weight of 90% – 10% and the pool weight at the end of 30 – 70% after 2 days.

That is, the weight of USDC will decrease from 90% to 30% and the weight of ATH will increase from 10% to 70% in 2 days.

Currently, the main application of TLAs is to provide services for issuing (selling) new tokens for projects.

Difference between Token Launch Auctions (TLA) and Liquidity Bootstrapping Pools (LBP)

From a user perspective, TLAs will resemble reverse auctions. With this form, the price of the Token will be started with a high price and then gradually decrease over time. During the auction period, investors can buy Tokens at whatever price they think is reasonable.

More detail, Token Launch Auctions (TLAs) is a specific application of Balancer’s Liquidity Bootstrapping Pools (LBPs)it provides a simpler user interface that allows anyone to easily create a TLA or participate in them.

Use Copper to create your own TLA

How to Create a TLA on Copper

First, you access https://copperlaunch.com/create and connect Metamask wallet yourself with the app.

Next, you select a valid ERC-20 contract address for the token you are auctioning and enter the number of tokens you want to auction.

You then need to give those tokens an initial value by collateralizing an amount of assets (e.g. 10 (82698) wETH). Collaterals supported on Copper are currently wETH, DAI or USDC.

Next, you set the deadline for the auction and set the final weight between the launch token and the collateral in the LP.

In addition, you can add a description of the project, set up more URLs, and transaction fees, so you have created a TLA on Copper yourself.

Related fees

There are two fees for launching new tokens on Copper.

• First is swap fee, it is set and collected by the launch project. This fee is intended to prevent bots from manipulating the price of the auction. Swap fee is usually chosen between 1% – 3% and this fee is collected directly by the project team in the auction in both the project’s native token (user sells native token in the auction) as well as in the asset. collateral (user buys native token on auction).
• The second fee is platform fee applied by Copper at the end of the auction on the total amount raised. The total amount raised includes the amount raised + swap fee, Platform fee is a fixed percentage that is automatically transferred to Copper after the end of an auction.

Key features of Token Launch Auctions (TLA)

Here are some salient features of Copper (TLA):

• Price discovery: The price of the token starts high and drops based on a preconfigured bearish curve. This can counter strong buying pressure from auction participants.
• Open & permissionless participation: Freedom to launch tokens and participate in auctions, there will be no whitelists, hard caps, and there will also be no listing, minimum or maximum allocation requirements. Auction participants are free to choose how many tokens they want to buy.
• Fair distribution: TLA helps get the project’s tokens into the hands of as many people as possible in a fair way. TLA is an effective way to combat front-running. In a TLA, anyone can buy or sell freely.
• Capital efficiency: The initial price of the token being auctioned can be exaggerated up to 99 (94576) times the collateral deposited with it. Alternatively, the collateral can be fully reclaimed at the end of the auction unless the tokens being auctioned already exist outside of the TLA and someone decides to sell into the auction.

Highlights of TLA compared to other fundraising methods

Personally, I find the biggest advantage of TLA when compared to other fundraising methods is the factor “permissionless“.

Just as you can create your own liquidity pool for any token on Uniswap, you can now set up an auction for any token yourself when using Coper to create a TLA. Of course, “Permissionless” also has its own advantages and limitations.

Advantages in work save the resources (your money, effort, time,…) of the project team and open a new token sale to raise working capital.

• On some well-known IDO Permission platforms, it can take months for the IDO project team to evaluate your project to see if it meets their standards, and a variety of other formalities before Your token can be IDO on their platform.
• With Copper, anyone can easily create a token auction in just 10-15 minutes, participants can also easily buy & sell auction tokens during the auction. This brings great scalability when high demand and high usage increase.

Reference: What is IDO?

The biggest limitation is that there are not many measures to protect investorsquality projects and scam projects can easily create an auction on Copper to raise capital, there is no difference between them.

Now the responsibility will fall on users more, because they will have to check information related to the project they want to participate in and be responsible for their investment.

summary

I hope these contents will help you get an overview of Token Launch Auctions (TLA) and the main features of this type of fundraising.