Garrett
@garrett
Launching a token and only profiting off of LP fees might be the fairest way to launch a token If you can attract volume/attention then you will be rewarded with LP fees It’s the best incentive alignment between the token holder base and the creator based
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six
@six
disagree. if i launch a coin that goes to 1m and then back to zero and make money off the LP fees, that's the opposite of incentive alignment, i profited from volatility while the people holding my coin lost money
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Garrett
@garrett
what’s the better alternative? What would you change?
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six
@six
well i don't think there's anything "wrong" with the concept of earning from LP fees, the clanker business model is great for clanker and for coin creators, not sure if i would change anything -- i just don't believe it's "incentive alignment". the creators incentive is volume while the holders incentive is price. generally higher price leads to more volume which does lead to good outcomes for everyone, but it does not always work in the opposite direction, i.e. volume does not always mean higher price.
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six
@six
will caveat, coin creators do earn the token via LP fees, *that* i would say is incentive alignment as coin creators have shared upside with holders in the form of token ownership. but the general concept of taking a cut on volume, i don't think is inherently incentive alignment.
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Garrett
@garrett
This is a key part that I think creates incentive alignment with LP fees It’s not perfect as you point out bc volume doesn’t always mean positive price action but i think it’s the simplest and best option
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Leo
@leohenkels
1. Also incentivizing volume is a better legal strategy than having people beg for price to go up. Whales can do that. 2. Token creators may be less incentivized to dump on retail when price goes up if volume is increasing as well..
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six
@six
1 seems independent of the incentive alignment discussion? 2, sure, but if we’re saying we don’t want creators to sell tokens then it negates that token ownership is even an aligned incentive
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six
@six
At which point, we’re back at only caring about ETH fees from volume, which is unaligned incentive + profits from volatility not appreciation Again, not saying any of this is bad, just not aligned incentive to holders. Maybe not even a conversation that really matters, was initially just responding to the point in the OP
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Leo
@leohenkels
Good points. Would be a good podcast or long form piece.
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