Unlock the True Potential of Points and Pre-market with Bubbly Finance
In the past year, ‘points’ have surged as a reward system to track user activities and market platforms. However, many airdrop hunters and yield farmers are frustrated by the lack of liquidity, vague rules, and uncertain rewards in the current points market. This makes it difficult to price and cash in on points, leaving farmers working in the dark.
Bubbly Finance is here to change that.
Love it or hate it, points are here to stay. And with Bubbly, they just got a whole lot better.
Bubbly aims to become the Uniswap for pre-market tokens. We’ve designed a novel AMM model called Margin Liquidity Market Makers (MLMM) to make illiquid assets liquid.
But wait, there’s more. Points aren’t the only market Bubbly Finance is targeting. Other illiquid pre-market assets such as airdrop allocations, SAFTs, and vested tokens are also common concerns for farmers. With Bubbly Finance’s MLMM design, pre-market assets will have improved liquidity. Bubbly will bring efficient price discovery for all types of pre-market assets, making it a more pleasant experience for farmers. Solving farmers’ resistance to farming is great for protocols too, as a liquid market will attract more participants willing to interact with their protocols.
A win-win is what Bubbly is aiming for.
Despite its challenges, the points system is a promising move in this cycle.
In recent cycles, crypto projects have heavily utilized direct token incentives like liquidity farming. While this approach is straightforward, it has revealed numerous shortcomings. Primarily, liquidity farming depends on smart contracts, which lack the flexibility to handle more sophisticated strategies. As a result, many projects that adopt liquidity farming tend to attract hordes of short-term users. These users focus on farming, claiming, and promptly dumping their gains, disrupting the intended ecosystem balance.
This cycle introduces a fresh incentive method: the points system. Unlike traditional approaches, it doesn’t involve direct token distribution to users. Instead, participants accumulate points over time. These points are set to be converted into tokens and distributed at a future date.
Drawing from its origins in Web2’s server-side tracking, the points system efficiently incorporates proven growth strategies and incentive methods like referrals. This adaptability stems directly from the maturation of the crypto industry’s business logic. Moreover, the points system simplifies the process of recognizing and rewarding long-term loyal users — a reflection of the industry’s continued evolution.
Therefore, the points system might not only persist but also bring substantial benefits to the entire industry. However, it’s not without its challenges. Since points are eventually converted into tokens, they inherently possess value. Despite this, the industry currently lacks a clear and credible method for the price discovery of points. This absence of definitive pricing guidance renders the incentives from points projects ambiguous for average users, deterring many from engaging. Furthermore, unlike the last cycle, where participants could accumulate reward tokens and provide liquidity to earn additional benefits — thereby enhancing the project’s value — the current points system does not accommodate such activities for long-term supporters.
We hope to address these pressing issues, enhancing the points system to make it more comprehensive and beneficial for the entire industry.
Bubbly is designed to enable pre-market pricing and generate extra yields, enhancing value across the board.
Bubbly Finance is an AMM-based pre-market DEX. When we talk about the ‘market,’ we’re referring to both spot and derivatives trading. Yet, there’s a unique category of assets called ‘pre-market assets’ that emerge before the creation of spot tokens. These assets, which include points, airdrops, and SAFTs, are not issued as circulating ERC-20 tokens and hence, lack the traditional transferability and tradability features.
The Bubbly team is committed to the idea that any asset, even those not yet on-chain, can be priced and yield returns. We aim to delve into the core financial characteristics of pre-launch assets such as points, addressing the common concerns and complaints currently faced by the industry.
Pre-market assets like points operate akin to traditional finance futures with physical delivery — a concept familiar in traditional markets but less common in the crypto space. Crypto enthusiasts generally gravitate towards perpetuals, which are futures contracts without an expiration date or the requirement for physical delivery. These perpetual futures lack robust price discovery mechanisms inherent to physical delivery, relying instead on mark prices and funding fees to maintain their price alignment. This presents challenges for pre-market assets that have a definitive delivery date but lack an established spot price.
Physical delivery is essential; it mandates that the protocol be designed around the traditional futures model and be natively deployed on each blockchain, rather than through an independent L1/L2 or CEX. Such a design simplifies the physical delivery process across various chains and aids in more effectively converting ‘points native’ users. Another pivotal component in this setup is the AMM — often considered the Holy Grail of DeFi — which significantly enhances trading efficiency and liquidity. We are convinced that AMM technology represents a crucial endpoint for every sector within DeFi, a milestone that has not yet been realized in the pre-market segment.
So, we designed the MLMM, which combines the principles of Concentrated Liquidity Market Makers (CLMM) with traditional futures’ margin concepts to innovate a pre-market AMM. In this model, users can leverage collateral to buy or sell points or virtual tokens. Upon token delivery, the seller must fulfill the order by delivering the actual tokens to the buyer. Failure to do so results in the loss of their collateral, ensuring commitment and reducing default risk in transactions.
For traders, we aim to craft a user experience akin to Uniswap, where locating specific orders isn’t necessary. Thanks to the passive liquidity already in place, traders can instantly buy or sell pre-market assets. Additionally, traders have the flexibility to buy a pre-market asset and sell it back, or vice versa, to realize profits and losses in advance. There’s no requirement to lock in liquidity until the actual token delivery. Of course, both buyers and sellers have the option to hold their positions until the final stage of physical delivery.
For points farmers, Bubbly Finance generates extra yields. — an opportunity not available elsewhere. Liquidity providers can pair points with a quote token to provide liquidity. Our distinctive design allows users to initially supply just the quote token, adding the corresponding points only after their delivery begins. This strategy enhances capital efficiency and addresses a significant issue faced by many points farmers: the idleness of points. By enabling active utilization of points, we help maximize the potential returns and utility for points holders.
What’s Next for Bubbly
At Bubbly, we are committed to enhancing market transparency through our price discovery capabilities, thereby unlocking liquidity for traditionally illiquid assets. This initiative aims to enable retail investors to engage in trading earlier, contributing to a fairer market environment. Additionally, we provide points holders with an innovative avenue to generate additional yields, thus boosting their capital efficiency.
The Bubbly team is diligently working on perfecting the final internal version of our platform. Over the next month, we plan to gradually roll out the whitepaper, comprehensive product documentation, and the testnet protocol. Stay tuned for exciting updates and developments from Bubbly!
