Author: NingNing

From the market perspective, the LBP platform is considered a 1.5-level market situated between the primary venture capital market and the secondary trading market.

Its mechanism utilizes smart contracts to conduct Dutch auctions for the sale of primary market project tokens. Unlike traditional auctions, the IDO price starts high and automatically decreases, halting upon a successful transaction. If no new transactions occur after a period of time, the price will continue to decrease.

LBP allows the introduction of secondary market mechanisms into the token issuance process of the primary market, effectively discovering the market price of new projects.

Through smart contracts and market dynamics, LBP achieves relative fairness in the sale of new coins, preventing the phenomenon of whales cornering a new coin and then dumping it in the secondary market.

However, LBP cannot guarantee absolute fairness (which no technology or mechanism can achieve). Under the rules of LBP, whales still possess asymmetric advantages such as financial and informational superiority.

As the market enters a bull cycle, the primary market gradually becomes lively, with strong demand for new assets, making the LBP platform a lucrative business.

Taking the current LBP platform leader, Fjord Foundry, as an example, with a total financing of $954,788,833, a trading volume of $1,474,431,124 during the LBP period, and a total fee income (excluding curation fees, etc.) of $26,922,859.

But for retail investors, is participating in LBP a good investment?

Using Fjord Foundry as an example, according to coincarp's statistics, in the last 36 IDOs, the average current ROI (return on investment, 100% equivalent to break-even) is 304.78%, with an average maximum ROI of 1872.69%.

It seems good, but this is a common data statistical trick, only averaging without considering the variance.

In coincarp's statistics, there are 20 valid data for ROI, with a variance of 29.50, indicating an extremely uneven distribution of returns.

After removing the two highest values, 18.86x for Lyve Finance and 17.36x for Unibit, the average current ROI is 127.55%, with a variance of 1.425.

In normal circumstances, participating in Fjord Foundry's LBP during this period can yield a relatively stable return of 27.55%. This return does not outperform the concurrent increase in Bitcoin's value.

LBP is essentially a zero-sum game. When factoring in trading costs, gas fees, and opportunity costs, it may already belong to the negative EV game. When participating in LBP, it is advisable to adopt a "hit-and-run" mentality. The operating principle is small amounts multiple times. Just in case you encounter a golden opportunity, right?

PS. I have participated in the new LBP platform 1intro in the Solana ecosystem. Although participating in LBP may not be a good investment, is the LBP platform a good business?

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