Safe Pool Offering Explained

DeFiStarter is a crowdfunding platform that provides a unique opportunity to raise funds and secure your investments.

DeFiStarter offers a way to reduce investors’ risks to zero, and to allow startups to raise financing without directly selling their tokens. For these purposes, the Safe Pool Offering Algorithm (hereinafter SPO) comes into action and ensures zero risk liquidity mining. Now all participants of the SPO will be able to get tokens of the startup without purchasing them directly, all that is necessary is to provide reliable and proven tokens to the liquidity pool. Now let’s take a look at the simplified algorithm by the example of the Balancer pool.

Step 1: DeFiStarter deploys a smart contract where a startup places its tokens, which will be distributed as a reward among those who provide liquidity to the Balancer pool.

Step 2: A user who is ready to participate in an SPO places liquidity (50% DAI and 50% USDC as an example) in the specific Balancer pool.

Step 3: Balancer mints BPT tokens of the pool to the user.

Step 4: User places BPT tokens on a DeFiStarter’s smart contract.

Step 5: Balancer calculates the reward in BAL tokens.

Step 6: BAL tokens are passed to the startup.

Step 7: Startup tokens are transferred to the user.

Step 8: User takes BPT tokens and can take back their liquidity + Swap Fee of the Balancer pool.

This scheme allows startups to raise funds for the launch, while investors can get tokens without buying them directly.

SPO Providers

DeFiStarter is based on Balancer as an SPO pool provider with the most compelling conditions for liquidity mining. However, later on other reliable projects such as Compound, AAVE, UMA etc., can also be used as SPO providers.

Rewards Distribution

The distribution of startup token rewards is subjected to the following rules:

Rule № 1:

During the lifespan of an SPO, rewards are distributed daily to those users who are currently staking their BPT tokens.

Rule № 2:

The amount of total daily rewards depends on the lifespan of a pool and the total number of tokens the startup has in it.

Rule № 3:

The rewards are calculated in proportion to the shares of the total number of BPT tokens staked at the time the distribution algorithm was launched.

Rule № 4:

If at the moment of the distribution there are no BPT tokens on the smart contract, the rewards for that day remain unallocated.

Rule № 5:

After the end of the SPO, all unallocated rewards shall be returned to the startup. Let’s take a look at a few examples:

Example 1:

An SPO pool contains 30 AAA tokens of the startup. The lifespan of the pool is 3 days. Therefore, 10 AAA tokens will be distributed daily.

Day 1: On the first day, Alice staked 2 BPT tokens, and Bob staked 1 BPT token. Smart contract will distribute 10 AAA tokens: 6.66 AAA tokens will be assigned to Alice and 3.33 AAA tokens will go to Bob.

Result:

If the users did not take any additional actions in the following days — after the SPO ends Alice will be rewarded with 20 AAA tokens, and Bob will be rewarded with 10 AAA tokens, in proportion to their shares in the pool.

Example 2:

There are 30 AAA tokens of the startup in an SPO pool. Lifespan of the pool is 3 days. Therefore, 10 AAA tokens will be distributed daily.

Day 1: Alice and Bob staked 1 BPT token each. There are only 2 BPT tokens in the pool. Alice was rewarded with 5 AAA tokens, Bob was rewarded with 5 AAA tokens.

Day 2: Alice withdrew her 1 BPT token. There is only 1 BPT token that belongs to Bob in the pool and he will be rewarded with all 10 AAA tokens.

Day 3: Alice staked 3 BPT tokens. There are 4 BPT tokens in the pool now. Alice received 7.5 AAA tokens, Bob received 2.5 AAA tokens in proportion to their shares in the pool.

Result:

After the end of the SPO Alice got 12.5 AAA tokens, and Bob can withdraw 17.5 AAA tokens.

SPO Pools Specifications

SPO pools have such features as hold, grace period and platform commission.

Hold — a minimum period of time during which users cannot withdraw their BPT tokens from the pool. It is 7 days by default.

Grace period — a period of time after the end of an SPO, when a user is able to claim their rewards. It is 30 days by default.

Platform commission — a part of the funds collected by a startup, which is held by the platform as a commission. By default, it is 2%.

Note that there is no time limit for withdrawing BPT tokens other than the minimum hold period. Unlike the grace period, BPT tokens withdrawal doesn’t have any further time restrictions.

Next Steps

Our team has decided that the first project to run an SPO on our platform will be DeFiStarter itself. The pilot SPO pool is already live and we will distribute the first 10,000 DFST tokens within 30 days. We have initiated it so that our early supporters and all DeFi enthusiasts could get acquainted with the platform. To participate in the pilot pool, please read our step-by-step guide first.

During upcoming SPO campaigns we will distribute 7,000,000 DFST tokens (you can find more information about DFST tokenomics here). Stay tuned for the updates!

Stay tuned

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