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#7

Building on the previous question, your token launch strategy is to optimize an airdrop to decentralize supply and activate community members. How do you evaluate approaches to token liquidity? For example, do you have insight into costs for CEX listings and market makers? How would these costs compare to providing liquidity on DEXes?

Eric's Response

Sure. This is not a topic I'm very knowledgeable about, so take everything I say with a grain of salt here.

The airdrop strategy, CEX listings, market makers/liquidity provisioning are all connected but separate topics.

I'm more familiar with the deals projects make with CEXes and market makers and less familiar with deals projects make to ensure liquidity on DEXes.

For very big token launches, it is common that projects will engage with specialist firms to iron out all the details (e.g. Coinwatch, Glassmarket, Four Leafs). These firms will cost you hundreds of thousands of dollars in advisory fees (usually paid in tokens) just to make sure you're set up with a solid launch strategy with multiple CEX listings and good market making coverage.

There reason projects will pay specialist firms is because it is quite a dense topic, covering everything from spreads, floor prices to defend, exchanges to support. You'll supply market makers with 0% interest rate loans of your token supply, and the amount of tokens you'll lend them can go as high as 2% of your total token supply or more. The market maker will also ask for the ability to purchase these tokens are some future point at a discount (you'll basically sell them a call option with a TWAP strike price with discounts as large as 50%).

CEX listings also vary, for large projects and top CEXes, you can "get away" with offering them a few hundred thousand dollars if the integration work is minimal, but a few million dollars if there's a lot of custom work. For smaller projects, you'll probably be expected to pay USD in the range of $200k-500k, but they'll also ask for a part of your token supply (0.3-2%) to sell to their customers which you'll have to provide them at hefty discounts.

It is common for projects to just focus on the CEX part of this equation and allow DEXes to live their own life, as there's natural arbers between CEX<>DEXes and CEXes will have the deeper liquidity for major token launches.

On the other side of this spectrum, you'll see memecoins doing market presales and dump nearly all of the token supply paired with everything they generated in the presale into an AMM pair and let the market sort out its own liquidity that way.

For better advice, I suggest you consult someone more well-versed on this subject!