The Tapioca DAO TGE and How To Play It Successfully

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June 11, 2024
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Pinch yourself, slap yourself, or even hit yourself in the nuts if that’s your thing because this is not a dream. After more than a year of waiting, the Tapioca TGE is finally happening.

It's here, mi apes! June 11th.

For those of you who have been tuned in to blocmates for a while, you may know that we’ve been covering Tapioca for well over a year. It’s been one of the projects that we’re most excited about.

We started with this monster guide, which gives you everything you need to know about Tapioca. Then, we gave you the finer details. We gave you our bull case, followed by two sips of Tapioca. Sip one and sip two. Then, finally, blocmates legend DeFi Gaz gave you the idiots guide to Tapioca.

This long journey has now led to the moment we’ve all been waiting for: the Tapioca TGE.

So, in today's article, we’ll be running you through the general functions of the LBP, the TAP and oTAP dynamics, and finally, some alpha on how to play the launch.

Let’s jump right in, young padawan. I hope you're buckled up.

The Tapioca LBP

Tapioca will be launching its token through a self-hosted liquidity bootstrapping pool on Balancer in coordination with Fjord Foundry.

For those who don’t know, an LBP is essentially a pool in which the weightage of the two tokens is dynamically adjusted. This weighting changes as the pool progresses, and the pool creator can customize and configure it.

The reason for choosing an LBP is that it is the most efficient and fair launch mechanism available at the moment.

A team wants to achieve a few things when launching a new token: avoid major swings and volatility on launch, establish a fair market price, ensure fair distribution of tokens, and prevent bot manipulation. An LBP achieves all of that.

Let’s start with the parameters:

  • Tokens: LTAP & USDC
  • 5,000,000 LTAP & 170,000 USDC
  • LTAP start weight: 99%
  • LTAP end weight: 20%
  • USDC start weight: 1%
  • USDC end weight: 80%
  • Swap fee: 1%

LTAP is simply a receipt token for TAP. Once the token is live after the LBP has concluded, it can be claimed 1:1 for TAP. Don’t worry—there’s no vesting, timelocks, or any other funny business. It can be claimed instantly.

Apart from the LBP, this launch phase will also include the distribution of tokens to financial contributors and an airdrop. So, in total, 7,630,000 will be in circulation out of a max supply of 100,000,000.

The LBP will start at $3.52 and has a target end price of $0.88. However, based on demand, this could be higher. If we go according to the LBP weights, this means that Tapioca will have a circulating market cap of $6.7M after the LBP. Incredibly cheap, if you ask me.

There are no whitelists or anything of the sort for this LBP. It is open to everyone, and there are no hard caps on how much you can buy. All you need is USDC on Arbitrum to participate.

All the funds raised through the LBP will be sent straight to the Tapioca DAO treasury and used to provide liquidity for the TAP token and USD0.

This summarizes all you need to know about the LBP. Now, I know you guys are waiting to see how to play the LBP, but just before that, let us refresh your memory on the different tokens and their dynamics.

Tokenomics refresher

There are three elements to the tokenomics:

  • TAP
  • oTAP
  • twTAP

TAP is the main native token of the TapiocaDAO ecosystem. It will have a set supply of 100M tokens. No more will emitted. This means that there’s no liquidity mining baked into the tokenomics, so the only way to use it and participate in the ecosystem is by buying it. The best way to do that is through oTAP redemptions.

Rather than using the regular unsustainable reward mechanism that lending markets typically use, Tapioca issues the oTAP token as a reward. oTAP is essentially an option token that gives you the right, but not the obligation, to purchase TAP tokens. These options expire weekly, and if they are not exercised, they roll over into the next week.

oTAP can be earned by providing collateral to the protocol. After you have the oTAP, you can purchase TAP at a discount from the DAO. This means that while rewarding users, the protocol also generates protocol-owned liquidity without unsustainable emissions.

This protocol-owned liquidity can then be used for activities such as providing liquidity, strengthening the treasury, etc.

Now, let’s say you exercised your oTAP option and bought TAP at a discount. You can further unlock the token's power by locking it for twTAP.

The twTAP token uses a time-weighted locking mechanism. Users can lock their tokens away for certain epochs, with the minimum being one epoch.

There are many good things about twTAP. For starters, it doesn’t decay like veCRV. Additionally, lockers earn 100% of protocol revenue generated through fees, half of the yield generated by Tapioca LP pairs, and, of course, voting rights for governance proposals.

I personally don’t like locking tokens and often stay away from doing it. Still, it’s looking incredibly attractive with Tapioca, especially given that they are launching at a pretty low market cap for their potential.

Alright, now that you understand the token trifecta, let’s get into the juicy bits. How to play this damn TGE.

Playing the TAP TGE

You naturally don’t want to go too early when the LBP price is at its highest. You also don’t want to go too late, as you may risk not getting any at a reasonable price.

I think the best approach is to DCA over the 48 hours and get a nice average price.

I imagine more buying will occur towards the end of the LBP as people are typically lazy and wait for lower prices.

IF, and it is a big IF… the TAP price begins to climb higher than the starting LBP price, then all bets are off, and it’s anyone's guess.

You are going to want to keep a small portion of your stack for the oTAP airdrop that will be distributed to LBP participants. This is an option with a discount of 50% and is expected to be roughly 30% of what you committed to the LBP. So, if you purchase 100 TAP during the LBP, you will be airdropped 30 oTAP, which you can choose to exercise. Make sure you keep some of your stack to exercise the oTAP airdrop. 1,500,000 TAP will be airdropped to LBP contributors.

Concluding thoughts

This is an incredibly exciting time, especially for us at blocmates, since we’ve been waiting on this for a LOOONG time.

We absolutely love this team and believe their work will speak for itself.

Beyond that, Tapioca is also filling an important gap in the market by creating a proper, seamless cross-chain lending protocol. Something that I believe will genuinely be used by people over regular single-chain lending markets.

As we’ve repeatedly iterated, this protocol and its potential is immense. Now, there’s nothing else left for us to say other than we’ll see you in the LBP books.

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