On June 15th, Credmark launched a 3-day Initial Decentralized Offering (IDO) of their token - CMK - using a new, experimental methodology on Uniswap called “Swap Drops”. Swap Drops happened in two phases: first CMK was swapped for USDC, then dropping CMK to create concentrated liquidity within a certain price range. The swap allows us to collect USDC to reduce downside movement and the drop to reduce slippage in that range while allowing our community to become tokenholders without contending with rapid price fluctuations caused by speculators. Swap drops were done every 2 hours for 3 days.

You can read about our IDO plan in detail here, but the focus of this article is what we learned during the execution of the IDO, including where we adjusted the plan to meet real world conditions and considerations for other projects considering this approach.

ECONOMICS & TRADING

Credmark’s IDO strategy was incredibly successful in building a stabilized asset. Only 2 days after the completion of our IDO, we saw the worst day of the year for crypto. Our price moved -6% against ethereum's -17%. This stability allowed our community members to become token-holders at an excellent price with extended buying opportunities at $0.36-$0.50.

What we learned: Because Credmark is a utility token, our IDO strategy was designed to have negative price pressure to reduce speculation-induced volatility and front-running bots. However, the negative price reinforcement on mainet considerably exceeded all models and testing we ran on the Ropsten testnet prior to launching.

To reduce excessive downward price pressure during the three day launch, we progressively lowered the amount of CMK being swapped (our drops remained consistent). Following the IDO we cleaned up our Liquidity Pools to reinforce resistance to downward price pressure while reducing resistance to upward price movement.

COMMUNITY & DEMAND DYNAMICS

Immediately after our first liquidity drop, it became clear that we had a group of dedicated community members who understood and supported our projects. Specifically, they understood that the value of our token was driven by its utility, not speculation.

These community members were active in our telegram group, and on social media and spread the utility driven value of our token by word of mouth.

What we learned: While we had quality participation and support from our community, the overall trading volume was still lower than we hoped. This happened for two reasons: First, how successful we were in discouraging purely speculative or bot-driven trading with negative price pressure and a 1% uniswap fee. Second - we launched our IDO at the start of a significant bear market.

To support the long-term and demand for our platform and token we are prioritizing the growth of our community. We have adjusted our product roadmap to get more tools into the hands of our customers quickly, as well as create opportunities for governance staking.

TOOLS & TECHNOLOGY

As the first project to launch a token via a swap-drop, the operational aspects of our IDO were the most arduous. Since this would only happen once, and we had the foresight to know that with an experimental launch like this we would need to adjust our strategies in real time, we did not automate the process. That meant consistently performing a manual task every two hours.

Fluctuating gas prices and limitations within the Uniswap tool meant that many of our swap transactions failed. We strove to have our drops occur every 2 hours on the dot, but were left guessing how much lead time to give each transaction.

What we learned: One of the benefits of Balancer LBPs is that they allow you to create the pool in an already paused state, a feature that doesn’t exist on Uniswap v3. We needed our pool contract to activate our launch page’s front-end, and pushed the pool live on mainnet 15 minutes before our launch was scheduled. To get around this, we had to deploy the pool contract, which didn’t allow us to anticipate the address that would be assigned.

Speculators had already pushed the price to go up above $1.00 by the time our front end was launched. Fortunately, our downward price pressure was successful in deterring speculative behavior and stabilizing the price after the initial drop.

In retrospect, launching the pool a few minutes late instead of preparing the pool early might have had less of a psychological effect of people feeling like they’d already missed out by the time launch.credmark.com came online.