The frenzy surrounding the recent Bitcoin boom, has led to the rapid proliferation of institutional investors, an awakening interest from mainstream media, and a flurry of new blockchain start — ups, hoping to cash in on the heightened interest in cryptocurrencies.
As is the case with any industry, but particularly in the crypto world, there has to be sufficient long-term interest and a solid foundation, for a company to build and sustain investorial support. Recent corporate interest means that blockchain space will need to institutionalise, and offer innovative ways of providing meaningful solutions. Gone are the days where avid token holders buy into hype.
Now that institutional investors are adding Bitcoin to their portfolio, the blockchain has become the playground of big players. And while this bodes well for global adoption, it also means small fish, and big fish alike, are wary of any potential rug pulls, or exposure to potential loss.
With this in mind, and as many start-up projects look to find a place alongside more established projects in this nascent industry, building and maintaining partnerships will be a crucial factor in determining who stays, and who disappears into the ether.
A project may have the most exciting idea to date, but unless it has garnered sufficient trust from investors, it will have little substance to it. Strategic partnerships are the fuel for any successful start-up or well established project, but they can also be meaningless, or even worse, result in a lack of trust from investors.
A data driven approach allows potential investors to make decisions on the potential value of a project. Trust, however, is fundamental. Unlike tangible factors, trust is very difficult to build into a project’s identity . It cannot be bought (or stolen), but it is, however , very easy to lose.
Teams that realise the importance of building trust with their token holders, and hope to do so with a solid partnership, will need to find ways to actively prove that their partnership is not just a marketing scheme, but has a strong underlying commitment.
With cryptocurrency having gone through several hype cycles, investors are much more wary of adding liquidity to a pool. And while a strong partnership can send a project’s market value sharply up, it will not be enough to garner lasting credibility . Members of a project’s community simply do not want to risk significant losses as the result of unsecure smart contracts or investor drop-outs.
Through the desire to find a solution to the problems posed by partnerships, POP Town has created a way for two projects to prove their credibility and mutual commitment through a proof of trust. This fully decentralised project allows projects to objectively display their trust through the creation of mutual liquidity pools (MLP).
Meaningful partnerships are created as both project’s tokens are locked together, allowing users to become partnered farmers matching their liquidity with another user. Any potential losses are limited through a rebalancing mechanism.
After applying and being approved by POP, each project is able to provide their single-sided liquidity, thereby creating a MLP, and consequently locking their LP tokens away for a set time period. Once the MLP is live, farming partnerships amongst the project’s token holders can now be initiated via the POP marketplace. When farmers exit their LP, the POP smart contract will mitigate IL by market selling the surplus side in order to buy back the deficit side, while providing POP rewards.
In the current crypto space, the idea of being able to prove the credibility of a partnership is groundbreaking. This method allows a partnership to prove they are genuine, and ensures their value is tied up with one another. And in that way, the desire for mutual success is guaranteed.
Following increased regulatory scrutiny, and an ever more competitive industry, projects will find themselves held to greater accountability. And while any project will undoubtedly encounter snags along their journey, community support and confidence is everything.
In what has been an unprecedented year, in terms of social upheaval and technological advancement, building a culture of trust has never been more important. Now, POP has found a way to build this into the marketplace, and ensure that, at least in the crypto world, trust can be built into partnerships.
