Participation Constraints
This section is mostly AI fluff and requires substantial revision to reflect actual protocol design decisions.
Participation constraints are behavioral requirements that shape how participants interact with their purchased tokens during and after the Raredrop. These constraints align incentives between early buyers and long-term market health.
Overview
| Parameter | Description | Typical Range |
|---|---|---|
| Listing Price | Anchor price (usually acquisition cost or NAV) | |
| Distribution Goal | % of supply required before transition | 80–90% |
| Time Lock | Minimum duration before transition | 24h – 7d |
| Issuer Reserve Ratio | Portion retained for LP post-offer | 10–20% |
| Participation Constraint | Requires participants to LP their tokens | auto-LP = true → 100% paired into pool |
Common constraints include auto-LP requirements, lock-up periods, vesting schedules, and minimum holding requirements.
Auto-LP requirement
Requires participants to immediately provide liquidity (tokens + stablecoins) into the pool upon purchase. This transforms buyers into market makers, ensuring that early capital supports liquidity depth rather than extracting short-term profit.
Example: 100% of purchased tokens must be paired with stablecoins and deposited as LP
Purpose: Instantly recycles capital into on-chain liquidity, creating deep markets from day one.
Incentive alignment: Early participants benefit from discounted acquisition prices but must commit to supporting the market for a period of time.
Lock-up periods
Requires purchased tokens to remain locked (non-transferable) for a specified duration after the Raredrop. This prevents immediate dumps and ensures early buyers have skin in the game during the critical post-launch period.
Typical range: 7–30 days
Purpose: Stabilizes price discovery by preventing early exits before the market establishes equilibrium.
Vesting schedules
Releases purchased tokens gradually over time rather than all at once. This creates predictable supply flow and aligns early participant incentives with long-term collection success.
Purpose: Prevents supply shocks while rewarding patient capital.
Minimum holding requirements
Requires participants to maintain a minimum token balance for a specified period to receive benefits (e.g., governance rights, fee discounts, priority access to future drops).
Purpose: Encourages long-term holding and community engagement.
Design philosophy
Participation constraints transform the Raredrop from a one-time sale into a commitment mechanism. By requiring early participants to support market liquidity or hold through volatility, these constraints ensure that bootstrapping creates sustainable markets rather than pump-and-dump dynamics.
Collections can mix and match constraints to create distribution strategies that balance fair access, liquidity formation, and long-term alignment.