Polkastarter Review: How Does Polkastarter Works?

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Be the first to join Polkastarter, a Protocol built for cross-chain token pools and auctions, enabling projects to raise capital on a decentralized and interoperable environment based on Polkadot.

What is Polkastarter

Polkastarter is a protocol built for cross-chain token pools and auctions, enabling projects to raise capital on a decentralized, permissionless, and interoperable environment based on Polkadot.

Polkastarter Review: How Does Polkastarter Works

The team is building Polkastarter as the next step for truly interoperable DeFi. A Protocol built for cross-chain token pools and auctions, enabling projects to raise capital on a decentralized and interoperable environment based on Polkadot.

With Polkastarter, decentralized projects will be able to raise and exchange capital cheap and fast. Users will be able to participate in a secure and compliant environment and to use assets that go way beyond the current ERC20 standard.

In order to leverage advantages, smooth interoperability between various networks is a key to success. The killer feature of Polkastarter is the possibility of making cross-chain swaps, powered by the Polkadot ecosystem, which can provide higher throughput for faster and cheaper transactions while staying connected to the Ethereum Network and other blockchains for liquidity.

Other features include permissionless listings, token swaps by smart contract, private pools with passwords, whitelisting, and high slippage price alerts.

Pools will have several types of swaps, including fixed ratio swaps, dynamic ratio swaps, dutch auctions, and even sealed-bid auctions.

  • The future is decentralized.
  • The future is interoperable.
  • The future is Polkastarter.

How can projects use Polkastarter?

The platform allows cryptocurrency projects to raise funds by setting up a swap pool based on a fixed purchase rate for tokens.

These so-called “Fixed Swap Pools” have many advantages for token sale investors over traditional fundraising models like ICOs, IEOs, and IDOs (Initial DEX Offerings).

Fixed Swap Pools will maintain the token price throughout the sale until the initial supply is bought.

With Polkastarter, decentralized projects will be able to raise and exchange capital cheap and fast. Users will be able to participate in a secure and compliant environment and to use assets that go way beyond the current ERC20 standard.

What are Polkastarter’s use cases?

Startups and projects can raise funds on Polkastarter’s interoperable and decentralized infrastructure.

This technology can also have other applications outside of fundraising, such as;

  • Closed OTC deals with password protection
  • Discounted sales with whitelisted addresses
  • Token pools will include dutch and sealed-bid auctions
  • Crowdfunding
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What are the key features of the platform?

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What problem is Polkastarter trying to solve?

The first-ever Initial Decentralized Exchange Offering (IDO) of Raven Protocol took place on Binance DEX on June 17th, 2019. At the time, decentralized exchanges, or DEXs, had yet to gain much traction in the market.

With the explosion of DeFi in 2020, DEXs increased in popularity, and IDOs became an inexpensive way to get around the centralized initial exchange offering model.

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While IDOs on Uniswap certainly decreased the initial expense for a project’s token listing, that convenience came at a steep cost. The crypto community quickly adjusted to this new token launch mechanism. Savvy investors began to front-run listings immediately after a large amount of liquidity was provided to a Uniswap pool. Some would purchase the entire pool in one swoop, causing the crypto asset to soar in price as others attempted to do the same. The term “ape in” to a liquidity pool was born to describe those who turned up the gas on their MetaMask wallet to buy out entire pools of newly-created tokens at lower prices before others did the same.

The above in turn produced wild volatility and left many investors shell-shocked, additionally, this approach suffers from other significant downsides, most notably;

  1. Projects need to provide liquidity on both the asset for sale (base currency) and a quote currency (usually ETH) for it to initially trade against.
  2. Automated market makers, such as the one powering Uniswap, would dynamically adjust the asset’s price based on supply and demand.
  3. Increasing popularity and usage of platforms such as Uniswap reinforced scalability issues, with Ethereum network fees skyrocketing and slow platform performance, leaving end-users frustrated.

Users are increasingly demanding;

  • Cheap transactions
  • Secure, ultra-fast swaps
  • User-friendly design
  • The possibility to buy and move assets between blockchains

The killer features of Polkastarter is the possibility of making both fixed swap pools and cross-chain swaps, powered by the Polkadot ecosystem, which can provide higher throughput for faster and cheaper transactions while staying connected to the Ethereum Network and other blockchains for liquidity.

The future of decentralized finance won’t be tied to one chain and interoperability is already becoming a must-have feature of the DeFi future.

What is a Fixed Swap Pool?

Polkastarter will allow projects to list at a fixed price, which will be maintained for as long as there are tokens remaining in the original supply. This should ensure less volatility around a token launch.

It also allows a project and its investors increased transparency over the amount of money raised and tokens sold. This data is not as easily calculable when the tokens sold varies greatly with price volatility.

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How Liquidity Pools work in AMM Swap Platforms

A liquidity pool offers users liquidity at any price level. This property is a valuable benefit for projects seeking immediate liquidity for their project’s token. When the token has yet to go through an extended price discovery phase, it is really anyone’s guess as to its value. Thus, when a project creates a new liquidity pair for its protocol token, the initial price swings can be quite volatile, especially when there is less than $100,000 of value in the pool.

Each time a user swaps a token with the liquidity pool, the pool’s balance ratio shifts. Let’s say we have a pool that allows you to swap watermelons for grapes. The current rate for swapping watermelons for grapes is one against seven. At the moment, the pool holds 12 watermelons and 80 grapes.

Next, Alice swaps one watermelon for seven grapes. Now, the pool consists of 13 watermelons and 73 grapes. To offer liquidity at each price level, the pool needs to maintain an equal value balance (50/50 ratio).

Therefore, the smart contract controlling rate will automatically adjust the ratio, so each pool’s value is equal. Let’s divide 73 by 13, which results in the new ratio of 5.61 grapes per watermelon. This new ratio ensures a 50/50 ratio for both currencies in our liquidity pool.

Why Use a Fixed Swap Pool?

Fixed swap pools solve three main challenges:

  1. Lack of control mechanisms: Unfair token distribution and liquidity rug pulls
  2. Prevent token dumps by private investors
  3. Reduce token offering costs

As we can see, each time we swap with the liquidity pool, the rate changes. As projects try to launch their token via AMM liquidity pools, a popular token’s price can rapidly increase when plenty of investors buy it.

This price increase is caused by the bonding curve model that liquidity pools implement.

For that reason, a fixed swap pool sets a fixed price for token swaps. Projects who want to use the Initial DEX Offering (IDO) model know precisely how much money they’ve raised and how many tokens they’ve sold.

They know that their fresh community of token holders has paid a fair price. Conversely, the new token holders can be confident that the value they have contributed will go directly to the development of the project.

Furthermore, projects that pursue the IDO model with fixed swap pools can set additional parameters to gain more control over their fundraising, like controlling the maximum investment per user or the number of investors allowed in the pool.

Soft caps and hard caps can be hard coded into the smart contract.

Many elements can be crafted to make sure that the new set of token holders is taken care of as equitably and transparently as possible

How does Polkastarter differ from other DEXs & swap platforms?

Polkastarter’s product offering is much different than Uniswap.

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Our upcoming MVP relies heavily on our FixedSwap smart contract. Combined with our governance model, unique $POLS staking features and eventual Polkadot migration, we believe that Polkastarter is the correct approach for token launch teams.

Polkastarter Review: How Does Polkastarter Works?

What are the Tokenomics?

Private-Sale Structure ($POLS)

Sale Details

  • Total supply: 100M POLS
  • Initial circ supply: 17.875M POLS
  • Seed sale price: $0.0125 USD
  • Private sale price: $0.025 USD
  • Uniswap listing price: $0.05 USD
  • Total amount raised: 875,000 USD
  • Total POLS sold: 42.5M (42.5% of the total supply)

Market Cap

  • Seed sale: Initial mcap of $223.43k USD, fully diluted mcap of $1.25M USD.
  • Private sale: Initial mcap of $446.87k USD, fully diluted mcap of $2.5M USD.
  • Uniswap listing: Initial mcap of $893.75k USD, fully diluted mcap of $5M USD.
  • Initial Uniswap Liquidity: 200k USD

Token Distribution and Allocation

Polkastarter has only raised the most necessary funds to get the Product Development going and to give the POLS token the right kickstart in terms of Liquidity, Exchange listings, and Marketing.

While all Team, Advisor, and Foundational tokens are locked for at least 1 year, the rest of the tokens are allocated to the Token Sale, as well as to Liquidity Provision and Marketing actions.

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Token Release Schedule

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Release details

  • Seed: 20% unlocked before listing, then 10% monthly over 8 months.
  • Private: 25% unlocked before listing, then 25% monthly over 3 months
  • Liquidity: 22.22% unlocked before listing, then 8.88% monthly over 5 months, then 6.67% monthly over 1 month, then 4.44% monthly over 6 months
  • Marketing: 20% unlocked before listing, then 6.67% monthly over 12 months
  • Team & Foundational tokens: 1 year fully locked, then 25% quarterly

Final Verdict

Polkastarter has set a higher bar for DEX projects through its use of fixed swaps rather than automated market making. And the transparency and fairness that’s been added to the DEX and funding aspects of DeFi are a welcome change for the better.

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