Offering Size

The Offering Size refers to the total volume of Liquidity Notes that a cryptocurrency project intends to issue and sell during a specific offering period. This metric is crucial as it determines the scale of liquidity being built, the extent of the project’s obligations, and the potential impact on investors and the broader market.

The offering size directly influences the size of the liquidity pool, enhancing market stability and reducing slippage for traders.

The offering size determines the project’s financial obligations, including downside protection and upside boost liabilities. It also Influences the amount of project resources (e.g., tokens from the treasury) allocated to support the Liquidity Notes.

Projects may plan multiple offerings with varying sizes and mechanisms to scale liquidity provision over time.

Fixed Sale

In a fixed size sale, the entire offering of Liquidity Notes is made available at a predetermined, fixed price. The total number of Liquidity Notes available is capped, and once sold, no additional notes are issued.

Auction

In an auction, the offering size is variable, and Liquidity Notes are sold in multiple tranches at different prices based on investor demand and bidding. Different tranches of Liquidity Notes can be offered at varying prices, determined through competitive bidding. The total number of Liquidity Notes sold can fluctuate based on the auction outcomes and investor participation. Auctions facilitate a natural price discovery process, reflecting the true market value of Liquidity Notes based on demand.

Considerations to Determine Offering Size

• Market Demand

  • Assessment: Evaluate investor interest and market appetite for Liquidity Notes to determine an optimal offering size and appropriate sale mechanism.

  • Strategy: Align the offering size and sale method with the project’s liquidity goals and the community’s investment capacity.

• Liquidity Goals

  • Objective: Define the desired level of liquidity to support trading activities and price stability for the underlying token.

  • Alignment: Ensure the offering size meets liquidity requirements without overextending the project’s resources.

• Project’s Financial Health

  • Evaluation: Assess the project’s treasury and financial reserves to support the issuance of Liquidity Notes.

  • Sustainability: Balance the offering size with the project’s ability to fulfill its obligations, maintaining long-term sustainability.

• Regulatory Compliance

  • Regulations: Consider legal and regulatory frameworks governing token offerings and financial instruments in relevant jurisdictions.

  • Compliance: Ensure the offering size and sale mechanism adhere to regulatory limits and guidelines to avoid legal complications.