BorgPad is designed to enhance the utility of the SwissBorg token, BORG, while driving its on-chain adoption. This article explores the long-term benefits of BorgPad's Liquidity Bootstrapping Protocol (LBP) for the BORG token, particularly its deflationary effects.
LBP Mechanism
Participating in an LBP is equivalent to providing single-sided liquidity in a liquidity pool that is instantly staked to earn rewards, unlike traditional liquidity pools which require its users to deposit a pair of assets The main difference here is that the swap occurs at a fixed value meaning the price of the token you're swapping into or out of doesn't fluctuate based on the current pool balance as it would in a traditional AMM (Automated Market Maker). Potentially the portion of your liquidity pool (LP) return will be geometrically different.
LBP facilitates the following:
- Investors: Invest at a fixed valuation before prices fluctuate according to AMM rules.
- Projects: Source your LP liquidity directly from the community, building strong bonds and saving money that would otherwise be spent unnecessarily on centralised exchanges (CEXs). This allows you to keep developing your product.
Liquidity Providing in BORG
BORG is the currency of investment in the BorgPad LBP ecosystem. Whenever a user contributes to a project, they do so using BORG. The BORG tokens collected are then paired with the project's $Token to create a Liquidity Pool (LP) on a decentralised exchange (DEX) like Raydium, providing instant liquidity for on-chain traders and SwissBorg app users.
It is important to note that the LP is either entirely or partially burned (meaning it will never be unpaired), ensuring constant liquidity over time.
The $TOKEN/BORG LP offers two long-term benefits for the BORG token:
- BORG Locking: Similar to staking, the BORG in the LP is locked until the LP is unpaired (withdrawn from the pool). If the LP is burned, the BORG tokens remain locked in the pool permanently, effectively removing them from circulation forever.
- BORG Burning: Each time a swap is performed using the $TOKEN/BORG LP, a fee is deducted from the exchange. The fee is captured in either $TOKEN or BORG, depending on whether someone is buying or selling $TOKEN. When the LP is burned, the fees collected are also burned permanently. This process creates perpetual deflation for both tokens.
BORG Deflation Projection
Demand for BORG
To engage with BorgPad’s Liquidity Bootstrapping Protocol (LBP), users must use BORG as the currency of investment. Every project within the BorgPad ecosystem requires BORG for contributions, creating a consistent and direct demand for the token. This means that as more users participate in BorgPad deals, they need to acquire BORG, driving on-chain activity and increasing its value.
Simultaneously, an increase in activity and projects on BorgPad will increase the awareness and recognition of the value of BORG, creating the possibility of greater activity outside of the SwissBorg ecosystem. This can lead to a greater trading volume and adoption of BORG on-chain.
A beautiful cycle
BorgPad represents a transformative step in enhancing the utility and adoption of the BORG token. Through its innovative Liquidity Bootstrapping Protocol (LBP), BorgPad not only simplifies liquidity provision but also establishes a robust, deflationary mechanism that locks and burns BORG, reducing its circulating supply over time.
This dual benefit of consistent demand for BORG within the ecosystem and its shrinking supply creates a powerful economic dynamic, positioning BORG as a valuable and sustainable asset both within and beyond the SwissBorg ecosystem.
As more users and projects participate in BorgPad, the resulting on-chain activity, awareness, and trading volume will further solidify BORG's role as a cornerstone of SwissBorg’s mission to drive accessible, community-focused crypto adoption. By aligning incentives for both users and projects, BorgPad not only boosts the value of BORG but also strengthens the broader SwissBorg ecosystem for the long term.
