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Risks and Limitations of LBPs

As with any endeavor in the crypto space, there are potential risks and drawbacks associated with Liquidity Bootstrapping Pools (LBPs) that participants should be aware of.

Potential Risks#

  1. Open-Access Risks: LBPs are permissionless by nature. Although currently Swerve LBPs are curated by the Swerve team, in the future any project may decide to launch on the Swerve platform. Please conduct due diligence before participating in any LBP.
  2. Impermanent Loss: As with any liquidity pool, there is the risk of impermanent loss for liquidity providers (typically the project) due to other price fluctuations during the LBP sale duration.
  3. Limited Participation: Although an LBP may last for 3 days, the price target for a specific participant may only briefly appear, if at all. Continuous monitoring of the pool may not be realistic for some participants. Plan your entries accordingly.
  4. Market Volatility: LBPs are not perfect, and sometimes they can exhibit price volatility. Be careful and patient in timing your swaps.

Swerve is committed to help projects and community members navigate the LBP model and maximize the benefits of this innovative fundraising mechanism. Please contact as in our Telegram channel or via email for further inquiries and / or consultation.