Farcaster is uniquely positioned to bring Appcoins to market, thanks to its combination of

1. Talented builders

2. Crypto-native audiences

3. Support for in-feed apps

The appcoin trend is emerging from the "memecoin" meta that has dominated for the last year. However, the apps themselves are closer to startups than they are to memes. That's why we've designed a new protocol aimed at addressing the needs of startups. This protocol, powered by $LAUNCHER, is available to all apps listed on Farstore, a Farcaster App Store.

Startup-aligned

We designed our protocol with the goal of replacing seed rounds. Onchain economic coordination starts with launching a coin, but the standard 1% trading fee is too low to fund the operations of a startup. That's why on every buy order, appcoins have a 3% buy fee, powered by Uniswap V4 custom fees.

An appcoin that sees $1m in buy volume generates $30k in fees using the $LAUNCHER protocol. 2/3 of that, or $20k, goes directly to the app creator's treasury, while the remaining 1/3 goes to the protocol (discussed at the bottom). Trading fees are continuous, so the possibility that a startup can sustain on trading fee revenue alone is very real.

Startups also need to be able to distribute their appcoin for custom initiatives, such as user airdrops, hiring, partnerships, and more. That's where sell fees comes in. On every sell order, a 3% sell fee is taken in the appcoin and funds a treasury that the app creator controls.

The protocol has no notion of token allocations; instead, appcoins accumulate to the treasury as selling occurs. This gives app creators perpetual leverage to distribute tokens toward initiatives they believe will benefit the growth of their app.

Funder-aligned

Our protocol has a pre-launch funding phase for apps, where anyone can contribute ETH toward the launch of an appcoin. By contributing ETH, funders signal interest to an app creator, encouraging them to consider launching. The pre-launch phase also eliminates snipers by giving everyone a chance to fund a coin before it begins trading.

All contributions are fully refundable prior to appcoin launch. Post-launch, those funds are swapped for coins at a single floor price. The floor price guarantees that pre-launch funders can sell their post-launch coins for their initial ETH, less trading fees (3% buy fee + 3% sell fee). The introduction of a floor price minimizes the risk to funders in the pre-launch phase.

Protocol-aligned

We align the success of the protocol with the success of appcoin creators. The protocol only benefits when appcoins are purchased – when app creators earn ETH – and not when they are sold. Of the 3% buy fee, 1% goes to the protocol and is used to buyback coins on the spot market. The full breakdown is as follows:

• 2.0% App creator revenue

• 0.8% $LAUNCHER buyback

• 0.2% $CLANKER buyback

$LAUNCHER was created in collaboration with Clanker devs. Our contracts are not Clanker contracts, however we plan to migrate to Clanker's official Uniswap V4 contracts in the future. In anticipation of that, 20% of our protocol revenue is automatically used to buyback $CLANKER on spot markets.

Dogfooding with our own startup

We designed this protocol as founders looking for an alternative to seed rounds. We've raised over $5m in a previous venture (Cent – most famous for selling Jack Dorsey's first tweet) and believe communities belong at the forefront of ownership for startups, particularly in web3.

Our startup, Tipn, has processed over 100k USDC tips on the Farcaster network. We're launching $TIPN to accelerate the like-to-tip meta that began with our product launch in April. People using Tipn to tip others will continuously earn $TIPN generated via the 3% sell fee.

There are no team allocations for $TIPN. The only tokens available at the time of our forthcoming June launch will be in the Uniswap V4 market. Leveraging the $LAUNCHER protocol, the pre-launch phase is already live on Farstore for the community to participate.

...

We believe the space has evolved dramatically since the 2017 ICO bubble. Crypto-native networks, onchain infra and scaling, and app ecosystems have all matured dramatically. These advancements have made it only possible now for onchain startups to flourish. $LAUNCHER is what will tie them together.

Join us in making this vision a reality!

LP incentives are rewards that you issue to market makers. Market makers (for crypto and non-crypto markets alike) enable more folks to buy and sell by providing deeper market liquidity.

Market making is an important part of any market. It allows traders, particularly those trading with size, to participate. Whales do not want to trade an illiquid token. If the market can't handle their typical 5, 6, or 7-figure order (i.e. it moves the market too much), they simply won't participate.

More liquidity also protects against the massive dump risk from early / large holders:

What is dump risk? As the name suggests, it's the risk that major holders (often early buyers) dump their coins on the market. Their massive bags are capable of crashing it by more than 10% in a single trade.

LP incentives solve dump risk in two related ways:

• They incentivize more market makers, and therefore more liquidity

• Would-be sellers instead become market makers to earn yield.

Let's break each of these down.

In crypto, yield is everywhere. Even ETH holders want to know much yield they can earn staking ETH. Generally, yield is quantified as a percentage of the value of your staked assets, on an annualized basis. So if you can stake 100 ETH and earn 5 ETH over the course of a year, your APY is 5%.

Markets have yield, too. Their yield comes in two flavors: trading fees and LP incentives. Both require you to be a market maker, which Uniswap supports outs of the box:

Trading fees are the fees market makers earn when people (🥁 drum roll...) trade. On most Uniswap transactions, the fee is 1%. Uniswap already provides a way for market makers to claim these fees natively, so we won't go into that here. Just note that it is one way to earn yield.

LP incentives are another powerful way to earn yield. Projects can allocate tokens to market makers, who earn tokens proportional to how much liquidity they provide on Uniswap. LP incentives are not baked into Uniswap; this is where Rebase steps up.

Rebase lets any token project create LP incentives, paid in the token of the project. In the screenshot above, $PROXY is being paid to market makers. These market makers, who provide $PROXY and ETH liquidity on Uniswap, are earning 120% yield in $PROXY.

The larger the LP incentives (the more tokens offered), the more attractive it is to be a market maker. In addition to bolstering liquidity, LP incentives mature the market for the better. Early whales have an opportunity to step up and put their bags to use. Whereas before they'd hope to "buy low, sell high" (very PVP), they can become longer-term participants, aligned through yield:

Originally, Rebase only allowed project creators to fund the LP incentives. This would require project creators to carve tokens out of their own personal allocations. We are excited to announce that is no longer necessary. Now, anyone can crowdfund LP incentives for a project at rebase.finance/crowdpools

Why would a bagholder contribute to the LP incentives? One way of summarizing the "why" is as follows:

Would you commit 5% of your bag to a program that could 5x the market?

In short, LP incentives are a powerful tool to bring in new participants by expanding the liquidity of a token. They also give existing holders a way to put their bags to work. Hopefully this brief overview has shed some light. If you have any questions dm @kompreni or post in /rebase on the purple app.

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