POP! ’s Mutual Liquidity Pools reduces Rug Pulls Possibilities and increases Credibility
There is nothing new about the rug pull scam. Rug pulls have been around for years, but only recently has the term begun to gain popularity.
Rug pulls occur when token creators get users to invest in a project by selling false promises or certain returns to abandon the project and steal their investor’s money.
A recent case involves the Squid Game crypto coin (SQUID) modeled after the popular Netflix show — Squid Game. The crypto developed as a parody play-to-earn crypto created with mechanisms similar to Shiba Inu and Dogecoin rose from cents in value to over $2800 in just a week.
After a short-lived boom, the value of the Squid Game cryptocurrency collapsed from a high of over $2800 to zero. According to BSC Scan, the creators of the currency made away with $3.3 million in funds.
AnubisDAO was the most recent rug pull
AnubisDAO (ANUBIS), a newly launched DeFi project, scammed investors $60 million in an alleged rug pull. Investors were bullish about this project and piled millions of dollars into it, expecting its value to explode as much as Dogecoin did.
The decentralized reserve currency backed by liquidity provider fees and bond sales unexpectedly closed down. Everything in the AnubisDAO liquidity pool was stolen, with some users losing up to $470,000.
We should note that AnubisDAO achieved all of this without a single piece of documentation and without a website.
Introducing POP! ’s Mutual Liquidity Pools to create security
It’s challenging to measure the level of commitment a team is giving to a partnership. A lot of expectation is set on partnerships that fail to live up to expectations. Sometimes because the users may not have fully committed, the participants may have wrong or malicious reasons why they are getting into the partnership.
The fear of rug pulls plus impermanent loss is a considerable barrier to liquidity mining and overall blockchain adoption. The anxiety brought about by potential token loss is a disincentive to people looking to engage in meaningful partnerships and trades.
Current liquidity mining systems need to be improved by adding mechanisms that encourage people to spend their tokens. One way to do this is by using POP!
The mechanism behind MLP’s
The POP! Mechanism allows users to partner and develops a mutually beneficial relationship. It facilitates trust by establishing transparency and accountability through mutual partnerships.
The design of the POP protocol allows for a more constant and less volatile flow of funds while reducing the amount of IL needed at the end of a farming period.
Farmers benefit from a simple rebalancing mechanism, meaning it’s easier to liquidate their holdings at the end of the farming period. This system reduces the immediate and long-term risks involved with such large portfolios by shielding them from the risks stemming from capital loss.
POP! provides an extra layer of Credibility to reduce rug pull incentives
With POP! MLP partnered farmers create smart contracts that are tamper-proof and won’t be able to remove their tokens. If done, the tokens placed in the MLP become inherently worthless — the blowback would damage the offending project at a massive scale.
People often ask the question, “What is the difference between projects that participate in an MLP on POP! and those that don’t?” Projects that participate in an MLP on POP! are providing signals of greater Credibility and reliability.
To build trust in this emerging field, the best way to do so is to share information. POP! is signaling to the community they are serious about their commitment to transparency. This type of participation is crucial to building user trust and establishing a solid foundation for the growth of DeFi in general.
POP! is a platform that allows 2 projects to objectively display mutual trust and commitment to each other, by locking their respective tokens together and creating a trustless Mutual Liquidity Pool (MLP). In addition, it grants POP! users the opportunity to provide single-sided liquidity, in the form of their favourite token, by matching them with another POP! user and adding their joint liquidity into the MLP.
Powered by Faculty Group, POP! aims to set a new golden standard with regards to partnerships, and how they are perceived in the digital asset ecosystem.