BUILDING ON @virtuals_io - Part 1: Liquidity - The Standard
Liquidity is the core of any serious AI AGENT project. If you are a founder planning to launch a token on @virtuals_io, this should be your primary consideration. Liquidity reflects the true value of a token, not market cap, whitepaper, or roadmap. The sooner you allocate funds to liquidity, the better.
1. Understanding the Strengths and Limitations of Locked Liquidity in@UniswapV2 Pools
When launching the AI AGENT via @virtuals_io, 42.5K $VIRTUAL + 125M of your own token will be sent to Uni V2, locked for 10 years.
With this setup, your token becomes more trustworthy in public eyes, since you cannot rug-pull people even if you wanted to (by withdrawing liquidity). Additionally, all trading revenues on V2 pool are automatically compounded back to the LP position. This means the longer your token trades, the stronger the UNI V2 position becomes.
However, there are two weak points with this system:
Locked liquidity becomes meaningless if bad Dev can still dump the entire supply they receive from pre-bond, and then drain all buy-side liquidity in the pool. For example, they could use their wallet to dump in one transaction, and 90% of the Virtual in the pool would be in their possession. Therefore, burned LP is just a meme.
VIRTUAL implements a 1% tax for every transaction, effectively raising the trading fees from 0.3% to 1.3%.
Given these limitations, one Uni V2 pool isn't sufficient; establishing additional LP is essential to strengthen your token.
2. The Benefits of Robust Liquidity Pools.
A well-funded LP demonstrates your commitment to the project.
A strong liquidity pool can absorb the supply from early buyers and minimize slippage in both buying and selling.
A robust LP generates returns for your team's operating fund through trading fees.
In 2 months, $TRUST project earned a total of 80K:
61K in revenue rewards on Uni V3 (Now DATDAO takes this)
3.5K on Aerodrome
16K on Raydium + Meteora
Note that currently, the fee earnings are lower due to the recent drawdown of $VIRTUAL ecosystem, but we still receive around $5K (Excluding Uni V3).
3. Step-by-Step LP Guide: From BASE to SOL
Step 1: Prepare your capital:
Allocate at least 30K for liquidity provision; higher amounts are preferable
Acquire 20% to 30% of supply as Dev's wallet (200M to 300M tokens)
Step 2: Establishing Uni V3 1% Position
Pair with ETH: 4 $ETH and 10M to 20M tokens
Pair with USDC: 10K USDC and 10M to 20M tokens
Token quantity requirements depend on the market cap at deployment time. Watch the video below to understand this point easier.
Set range from 100K to your "fair value" market cap (Could be 10M, 50M, 100M, based on your calculations).
Alternatively, select full range with the option to adjust later.
Step 3: Implement LP on Aerodrome
@AerodromeFi stands as the best DEX on BASE currently. Their vAMM 0.3% functions similarly to Uni V2, full range. Earlier liquidity provision reduces costs on the buy side.
However, fees don't auto-compound, allowing you to withdraw earnings for development costs or manually reinvest in the pool.
Step 4: Going Multichain.
Degenerate capital on SOL is ready to invest in your project, go and capture it:
+ Bridge your token to @solana via @wormhole
First, register your token at: https://portalbridge.com/advanced-tools/#/register
Then bridge the token to SOL, treating it as a wrapped version of your BASE token (similar to how ETH exists on mainnet, while WETH operates on BASE, or BETH on BNB): https://portalbridge.com/advanced-tools/#/transfer
+ Seed liquidity on:
@RaydiumProtocol standard pool (comparable to Uni V2 or Aerodrome): Trading fee is auto-compounded, expanding the pool over time. You can choose to burn the LP later if you want.
Raydium 1% pool: Trading Fee is withdrawable, you can pay for your development costs using this.
Consider exploring @MeteoraAG - while more complex, it typically offers higher APR than Raydium and potential airdrop opportunities.
Recommended: DLMM, 100 BIN, 1%.
Comment below if you want a video for this one too.
This article was published through a Knowledge Grant from @wai_combinator. This will be a three part series on best practices for setting up Liquidity Pools..
All grant proceeds will go 100% to the $DATDAO wallet.
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