Polkastarter, a decentralized exchange on the Polkadot platform, is launching a mechanism for crowdfunding with several projects lined up to offer token sales through the platform.
Through the “Fixed Swap Pool”, projects can list their tokens and create a pool with a fixed purchase rate per token.
The product will be released on December 15th and the platform will use three projects to raise funds in the first three days of launch. These include two decentralized autonomous organizations, SpiderDAO and MahaDAO.
The first Decentralized Exchange Offerings or IDOs first appeared in the second half of 2019, but at the time decentralized exchanges or DEXs had not yet received much attention in the market. With the explosion of decentralized finance in 2020, the popularity of DEXs increased and IDOs became a cheap alternative to the centralized-first exchange bid model.
However, to launch an IDO, a project was required to provide both the liquidity of the asset to be sold and the liquidity of the currency to be traded against it. Automated market makers would adjust the token selling price throughout the sale based on supply and demand.
However, this causes whale investors to “get stuck” by increasing gas fees and purchasing entire newly created liquidity pools to secure lower priced tokens.
Allows listing of Polkastarter tokens at fixed price
Polkastarter will allow projects to be listed at a fixed price that will be maintained as long as there are tokens remaining in the original supply. This can provide less volatility around a token launch.
It also allows a project and its investors to increase transparency over the money collected and the amount of tokens sold. This data cannot be easily calculated when the tokens sold vary greatly with price volatility.
Polkastarter will also provide additional tools for projects seeking to raise funds, including Anti-Money Laundering and ensuring Customer Identification compliance. These tools will not be mandatory but will be available as projects require.
The Polkadot ecosystem that Polkastarter is working on recently announced the DeFi Alliance, which includes Chainlink and itself among its founding members.