Litepaper

Overview

Poolz is a decentralized, Layer-3 swapping protocol enabling startups to manage liquidity auctions, thus bringing them closer to early-stage investors and liquidity miners.

As blockchain-cryptocurrency innovators are looking for decentralized, censorship-resistant ways of fundraising, there has been an emergence of Initial DeFi Offering (IDOs) and Initial Liquidity Offering (ILO). Furthermore, given the rise of Automated Market Makers (AMMs), a token’s liquidity has become a crucial determinant of its market price.

Although the market is becoming more competitive and value-oriented, early-stage innovators are facing unprecedented challenges due to these fast-paced changes. Prior to listing, they now have to seek liquidity investments for their tokens. In turn, however, the scenario presents new opportunities for early-stage investors, facilitating higher and more secure returns through liquidity mining.

Poolz’s Solution

Poolz is a Layer-3 swapping protocol envisioning a decentralized way of connecting early-stage blockchain-cryptocurrency innovators and investors. Its unified interface allows project owners to launch and manage liquidity auctions that are easily discoverable by investors on the platform.

Starting off with Ethereum, Poolz embarks on a long-term mission to disrupt and fully decentralize liquidity auctions. The project is built with a vision to facilitate greater interoperability through cross-chain interactions, which in turn, will further strengthen DeFi adoptions and value.

Secured & Trustless

As such, there are two major hindrances to DeFi’s mainstreaming, apart from the commonly-discussed scalability issues. Most of the existing projects aren’t user-friendly and have steep learning curves. Furthermore, bug-ridden and poorly-written smart contracts appear to be undermining DeFi’s potential for being tamper-proof. To mitigate these issues, we have used React Native to build the responsive Poolz UI, along with an intuitive information architecture for a compelling UX.

By using Solidity for our back-end smart contracts, we ensured optimal security while achieving complex member variables, hierarchical mapping, and layered inheritance in our MVP. Furthermore, as a company, Poolz is non-custodial and all funds on the platform are held in auditable smart contracts.

Poolz's Market Opportunity

Decentralized Finance (DeFi) has been consistently gaining popularity for almost a decade, and presently, we are witnessing the much-awaited adoption boom. Driven by the rise of decentralized exchanges like Uniswap, as well as several promising dApp solutions, the market has grown by over 1000% since 2019. At the time of writing, the total DeFi market capitalization is over $16 Billion.

Despite the popularity, however, the adoption drive is still facing some obstacles. Blockchain-cryptocurrency startups need to bootstrap liquidity, in order to ensure profitable trading prices on DEXs and other AMM-based platforms. In this context, there is a rising demand for decentralized, integrated, cross-chain ecosystems that enable project owners to easily and securely conduct pre-listing liquidity auctions.

In turn, this represents a long-term business opportunity and market scope for layer-3 swapping protocols like Poolz.

The Poolz Ecosystem

Broadly, there are two categories of Poolz users. One involves the Project Owners or Pool Creators, while Investors or Liquidity Providers (LP) comprise the other. In this section, we discuss available pool types, the user flows, pool states, and Poolz’s governance model.

Types of Pools

There will be two types of pools on the platform—Direct Sale Pools (DSP) and Time-Locked Pools (TLP).

  • Direct Sale Pools (DSP): These are pools without any lock-in period, where investors get the token immediately after the swap.

  • Time-Locked Pools (TLP): These pools have a predefined lock-in period and investors receive their swapped tokens only after the completion of this duration. Poolz’s smart contract will also enable pool creators to define custom lock-in periods, thus releasing the swapped assets incrementally. For instance, say, disburse 40% of the swapped tokens immediately and, after say 1 month, the remaining 60% in 6-equal monthly vesting.

Pool Status

Any pool on the Poolz platform will have either of the following states at any given time. Based on the pool’s status (and, also type) the smart contract will transfer the liquidity and auctioning tokens to their recipients’ wallets.

  • Created: the pool is exclusively available for POZ token holders.

  • Open: the pool is available for all Poolz users.

  • Out of Stock: the predefined supply of auctioning tokens has been sold-out, but the pool’s duration has not ended. In the case of TLP, tokens will be locked for the remaining duration.

  • Finished: the pool has reached the end of its stipulated duration. Both for DSP and TLP, the leftover tokens are returned to the PO’s wallet at this point. Investors, on the other hand, get their tokens purchased (swapped) through TLP.

  • Closed: the pool is complete and tokens have been duly disbursed.

Project Owner’s Flow

Supported Blockchains & Wallets

Upon onboarding, project owners first need to select the blockchain protocol relevant to their project, as well as a cryptocurrency wallet.

In the MVP stage, Poolz supports projects based on Ethereum and the MetaMask wallet.

In the future, the platform will support other blockchain ecosystems. Moreover, users will be able to integrate wallets like WalletConnect, Coinbase Wallet, Fortmatic, Portis, as well as other non-ERC20 wallets.

Pool Creation

Project owners can initiate a pool by clicking on the ‘Create a Pool’ button. Since Poolz follows a strict non-intervention policy, project owners or POs need to specify the following parameters:

  • The token address (contract), containing information about its name and ticker. In the MVP phase, Poolz supports ERC-20 tokens. In the near future, the platform will integrate non-fungible ERC721 tokens, as well as other cross-chain standards and functionalities.

  • The total supply of tokens available for the particular auction or pool.

  • The asset for payments or inbound pool contributions. In the MVP phase, POs have the option to pair their tokens with ETH or DAI or both. In the future, more swapping pairs will be available as Poolz integrates other blockchain protocols.

  • The swapping ratio—that is, the auctioned token’s price in relation to the chosen liquidity asset. As an incentive for Poolz (POZ) token holders, POs will have to specify the percentage discount (say, X% of the ETH price).

  • The total duration of the pool, as well as whether it will be a Direct Sale Pool or a Time-Locked Pool. The creator also specifies the time frame (T% of total duration) for which the pool will be open exclusively for POZ token holders.

Transactions

After filling the details, POs need to click on the ‘Start’ button to register their pool on the Ethereum blockchain (eventually, on other blockchains relevant to their project). This will also initiate the following transactions from the chosen wallet:

  • The previously specified supply of auctioning tokens will be transferred to a Hashed Timelock Contract (HTLC), where it’ll be escrowed for the total pool duration.

  • The Gas fee for anchoring the pool and updating its data on Ethereum. The code architecture of the Poolz smart contract ensure around 85% less gas fee for project owners, as compared to the existing market standards.

Fees

Project owners will pay two categories of fees, to be used for the development and maintenance of the platform. For the share of auctioning tokens reserved for POZ holders, the fee will be 0.15% of the total liquidity generated. For the rest, it will be 0.2% of the total liquidity raised. In the future, the governance can take a vote to change the fees percentages.

Liquidity Provider or Investor’s Flow

Pool Selection

Poolz has a marketplace-like UI, where liquidity providers or LPs will be able to browse all pools hosted on the platform—past, ongoing, and upcoming. At this stage, they will have preliminary access to the following information about the pools:

  • Opening Time: when the pool becomes available. If the LP isn't an eligible POZ owner, an on-screen message will specify the time when the pool becomes available for non-POZ holders.

  • Closing Time: the end-time for the pool’s duration.

  • Time Left: remaining time available.

  • Token Name: the name of the auctioning token, as specified by the PO.

  • Payment Method: ETH/DAI or both, as specified by the PO.

  • Swapping Ratio: the conversion rate specified by the PO.

  • Status: the present status of the pool.

Supported Blockchains & Wallets: Although LPs can browse the above information, to participate in the pools they have select a blockchain ecosystem of their choice and connect a relevant wallet. In this regard, they will have the same choices as project owners.

Joining the Chosen Auction

Once this is done, the LP can click on the ‘Join’ button for their chosen pool. In the setup interface, they need to input either the amount of auctioning tokens that they want to buy or how much ETH/DAI they want to invest.

Whichever is the LP’s input, Poolz’s algorithm will automatically calculate the corresponding values based on the pool’s data. They will also receive a disclaimer informing the risks associated with investments, which he/she can accept or deny.

Recommendation: As a general safety protocol, investors must run a basic authenticity check before choosing a pool. This includes reviewing the smart contract, the owner’s portfolio, and other similar documentation to avoid scam tokens and frauds.

If they accept, the swap will initiate, transacting the chosen amount of ETH/DAI from their connected wallet, plus a fee that goes to the Poolz wallet. Depending on the pool type, the auctioning tokens will be immediately transferred to the same wallet or after the pool’s duration.

Benefits for POZ Token Holders

  • Access to exclusive pools: As already mentioned, every pool on the platform is limited to POZ token holders for an initial duration after its launch.

  • Access to better swap ratios: Exclusive pools also offer special discounts for POZ token holders, thus enhancing the possible returns for liquidity miners.

Swapping Rewards Liquidity providers get swapping rewards for participating on the Poolz network, in proportion to their contribution and the total liquidity deposited over the current week. Swapping rewards on the platform will be calculated and disbursed every 4 hour and in weekly cycles. However, this can be altered by governance in the future.

Mechanism: Suppose, LP (A) contributes to Pool (1) in the first 4-hour slot of Day(1)—Week(1). Now, if LP (A) is the only investor during this period, he/she get 100% of the swapping reward for that slot. Then, say, on the third 4-hour slot of Day (2)—Week(1), LP (A) would still be eligible for swapping rewards, but in proportion to the total liquidity deposited in the meanwhile. Likewise, LP (A) continues to get some reward for the remaining week.

The Poolz (POZ) Token

POZ is the ecosystem’s native ERC-20 token and will be used for incentivization, governance, project development, and token burns. As for investors and liquidity providers, the POZ token’s ownership makes them eligible for a range of use-cases.

Use Cases

The POZ token has several use-cases within the Poolz ecosystem:

  • Additional Benefits: Investors holding POZ tokens get additional benefits and better swap ratios for pools running on the platform, as outlined in the previous sections.

  • Governance: The Poolz platform will implement a regular Proof of Stake (PoS) consensus mechanism, enabling POZ holders to gain voting rights by staking their tokens is designated wallets. In general, the mechanism will involve limited-period staking, to be defined in details at the time of the platform’s governance launch.

  • Staking: POZ token holders will be able to generate annual passive income from their POZ tokens, by staking them in specific ERC20 wallets. As an incentive, POZ holders will gain staking rewards (discussed under allocation).

  • Token Burn: Poolz adopts a Limited Top Value Burn policy and will use 16.667% of its daily earnings to market buy POZ for token burning, with an upper limit of 20% of the total POZ supply.

Token Sale Metrics

  • Total Supply: 5,000,000 POZ

  • Seed Sale: 240,000 POZ, at 0.455 USD (avg. price). 25% TGE, then 25% quarterly.

  • Private Sale: 360,000 POZ, at 1 USD, with a capping of 2500 USD per person. 20% released on the day of sale and 20% after a month from the sale day. The remaining 60% is released as equal monthly vestings of 20%, for 3 months.

  • Auction Pools: 150,000 POZ to be auctioned at 1.6 USD.

  • Uniswap Listing Price: TBD.

Token Allocation & Circulation

Swapping Rewards: Out of the total supply, 1,850,000 POZ tokens (37%) will be allocated as swapping rewards for liquidity providers participating in pools listed on the platform. Swapping rewards will be available for 10 years, releasing 185,000 POZ per year (3,577 tokens per week). However, in the future, governance may decide changes to the vesting ratio, as well as the reward mechanism (discussed under ‘Liquidity Provider or Investor’s Flow’).

  • Mechanism: In proportion to their contributions, liquidity providers will gain a percentage of the total liquidity deposited over the current week. Swapping rewards on the platform will be calculated and disbursed every 4 hour and in weekly cycles. Suppose, LP (A) contributes to Pool (1) in the first 4-hour slot of Day(1)—Week(1). Now, if LP (A) is the only investor during this period, he/she get 100% of the swapping reward for that slot. Then, say, on the third 4-hour slot of Day (2)—Week(1), LP (A) would still be eligible for swapping rewards, but in proportion to the total liquidity deposited in the meanwhile. Likewise, LP (A) continues to get some reward for the remaining week.

Staking Rewards: 1,750,000 POZ (35%) will be allocated as staking rewards, to be circulated in the form of Average Annual Yields (AYY) POZ holders who stake their tokens in a compatible staking wallet. These tokens will be securely locked in a publicly-auditable Multi-Sig Wallet and will come into circulation over a period of 10 years, with a maximum capping of 175,000 tokens per year.

Private & Public Sale: 750,000 POZ (15%) will be allocated for private and public sales. At the time of writing, Poolz has concluded the seed sale of 240,000 POZ (4.8%) at 0.455 USD (avg. price) and the private sale of 360,000 POZ (7.2%) at 1 USD. Prior to listing, Poolz will conduct auction sales for 150,000 POZ (3%) at 1.6 USD.

Team & Advisors: 500,000 POZ (10%) will be allocated for incentivizing the Poolz team and its advisors. The team’s allocation will be disbursed over 6 months of equal vesting, after a lock-in period of 1 year. Advisors will receive their allocation similarly, but after 6 months of lock-in.

Liquidity Fund: 150,000 POZ (3%) will be allocated for providing liquidity on Uniswap and other exchanges after listing.