Pro rata launchpads vs. first-come-first-served vs. WingRiders Launchpad
Based on the community interest and discussion into understanding how different launchpad designs work, leading to many discussions about the pros and cons of each model, this analysis explores the pro rata and first-come-first-serves (FCFS) methods in detail, explains their benefits and drawbacks, and shares why for WRLP the current design was selected.
To make a comparison, we first need to define how each model would work in this setting:
- Pro rata: In this method, if the total contributions exceed the maximum amount, then each contributor would receive a fraction of the tokens proportional to their contribution in relation to the total contributions. This ensures that everyone who contributes gets a portion of the tokens, but potentially less than what they initially aimed for.
- FCFS: In this method, contributions are processed in the order they are received (using the validity range as a marker of sequence). Once the maximum amount is reached, subsequent contributions are returned in full. Early birds get exactly what they commit to, while late contributors might get nothing.
- Pro rata: Every contributor receives tokens, but they might receive less than their intended purchase if there’s over-commitment.
- FCFS: Early contributors get exactly what they commit to, but late contributors risk getting nothing.
💭 User behavior
- Pro rata: Might encourage larger contributions as users know they’re guaranteed a portion of the tokens.
- FCFS: Encourages contributors to act quickly, especially those in the higher tiers with early access. This might also lead to a rush, causing network congestion.
- Pro rata: Requires calculations to determine each contributor’s share based on total contributions.
- FCFS: Simpler in terms of processing as contributions are simply taken in order and stopped once the maximum is reached.
Commitment and withdrawal
- Pro rata: Users might be initially confused about how much of the tokens they’ll actually receive, especially if contributions frequently change. Since they can adjust their contributions, there’s a possibility that many would constantly alter their commitments based on the graph to secure an advantageous position. The ability to withdraw commitments can further complicate this, as a sudden large withdrawal could shift everyone’s expected allocation.
- FCFS: It’s more straightforward for users. They can see from the graph how close the total contributions are to the maximum. If they commit early, they’re confident about their allocation. The ability to withdraw might be used less frequently as there’s a clear understanding of the position based on time.
📈 UI graph
- Pro rata: The graph will show the total commitments, but users might need a dynamic estimation or calculator to gauge their potential allocation based on current contributions. This can be a challenging UI/UX design to make it user-friendly and avoid misunderstandings.
- FCFS: The graph can clearly show how much of the available tokens have been committed and how close the launchpad is to reaching its maximum. It’s easier for users to perceive where they stand.
Vulnerability to Manipulations
🐋 Large players
- Pro rata: Big players could manipulate the system by making large commitments early to discourage smaller players (making them think they’d get a tiny portion), and then withdraw a part of their commitment later to maximize their allocation.
- FCFS: Large players still have an advantage by committing early, but there’s less room for manipulation as the order is time-based.
🔄 Frequent commitment changes
- Pro rata: If the total commitment surpasses the predetermined cap, contributors are allocated a fraction of the tokens equivalent to their individual contribution’s ratio to the total commitment. While ensuring everyone receives tokens, the drawback is that it might be a smaller amount than anticipated. In this model, whales can heavily influence the distribution, often overshadowing smaller contributors, potentially discouraging participation from a wider community.
- FCFS: Contributions are accepted sequentially based on when they’re made (with the validity range indicating order). Upon reaching the cap, any following contributions are promptly refunded. This system rewards timely action, guaranteeing early contributors their desired allocation. A notable advantage is that, even if whales participate, they don’t distort the distribution as severely as in pro rata. This clarity and predictability make FCFS a more transparent and democratic approach, favoring all participants regardless of their contribution size.
📈 Strategic withdrawals
- Pro rata: Users can strategically withdraw to affect the perceived allocation for others and then recommit to secure a better position.
- FCFS: Withdrawal has a clearer consequence: if a user withdraws and then recommits, they risk getting a later time stamp and thus a less favorable position.
The role of NFT tiers and commit limits in bridging FCFS and pro rata
The introduction of NFT tiers combined with variable commitment limits (minimum and maximum) in the launchpad design seeks to find a balance between the FCFS and pro rata systems. By stratifying access based on tiered NFT ownership, the system grants prioritized access to different groups. This rewards early supporters or those with specific qualifications, giving them a head start similar to FCFS. However, the introduction of multiple tiers before general public participation disperses the intense rush and potential congestion associated with a pure FCFS model.
Now, with the added dimension of minimum and maximum commitment settings, projects can further control the fundraising dynamics. By setting a minimum commitment, projects can ensure that those in specific NFT tiers are serious participants, aligning with the project’s fundraising or community-building goals. On the other hand, a maximum commitment ensures that large players don’t dominate a particular tier, which further emphasizes the equitable spirit of the pro rata model.
The combination of tiered access and commitment limits effectively creates multiple smaller, controlled FCFS events. Different groups can participate in a more organized fashion, with the clarity of knowing their boundaries for commitments. This setup reduces the inherent risks of one entity monopolizing token allocation, making the process fairer for everyone involved.
In essence, the added layer of commitment controls within NFT tiers serves as a sophisticated mechanism to combine the urgency and clarity of FCFS with the equitable distribution ideals of pro rata. This multi-pronged approach ensures that even if one misses out on a higher tier, they have subsequent opportunities to participate, without the overwhelming pressure of an all-or-nothing scenario. By incorporating both tiered access and flexible commitment boundaries, the launchpad strikes a balance, ensuring organized fundraising while rewarding those with genuine, early involvement in the project.
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