Overview
Investors get 4 days to commit USDC to a raise. Sales have a discretionary cap, which means that the founder can choose how much of the USDC committed goes to the project. Allocations and refunds are given pro rata. For example, if a project receives $2M in committments and the founder caps the sale at $1M, everyone would get their share of the tokens and half of their USDC back. 10M tokens are distributed proportionally among all participants.Why a discretionary cap?
The purpose of the discretionary cap is to allow believers to participate while preventing projects from over-raising. If you look at other launch mechanisms, they all have issues:- Capped first-come-first-serve launches can be sniped
- Capped pro rata launches can be gamed - if you see a sale is 2x oversubscribed, you may put up 2x the USDC, which makes it even more oversubscribed - which leads to poor UX for believers
- Uncapped sales are more likely to over-raise
- Dutch auctions are too complicated
What happens when a sale is successful?
If a sale is successful, the following happens:- All USDC goes to a market-governed treasury.
- The authority to mint new tokens is transferred to the treasury.
- That treasury provides 20% of the USDC and 5M tokens to liquidity pools. In effect the project will buy back tokens below the ICO price and sell them above the ICO price.