Key Challenges
In the world of cryptocurrency, constant changes in progress, adoption, and regulatory frameworks bring forth ever-evolving challenges for the industry. Nevertheless, we remain committed to seeking solutions to these challenges, contributing to a more adaptable, safer, and user-friendly crypto landscape.
Although we would like to address all the challenges we encounter, we also acknowledge the importance of being realistic. Focusing on too many issues at once could lead to slower and less effective solutions. Therefore, we have identified a select few main pain points that the Ignite Ecosystem addresses and the primary beneficiaries of these solutions.
Developers
Start-Up Costs for New Tokens In traditional token launches on DEXs, a significant amount of initial capital is typically required, especially for liquidity provisions. This reduces the funds available for early exposure and building the project. In certain situations, the cost of providing liquidity becomes a critical factor in deciding whether to launch on the Ethereum chain or not. This challenge is particularly felt by those who aim to launch without pre-sales or private sales, as well as by individuals and teams with limited funding. Consequently, it often hinders the opportunities for smaller, less-established teams with great potential from entering the market.
Token Launch and Management Complexity When it comes to token launches, teams often opt to hire solidity developers to create their smart contracts if they lack the necessary skills within their own team. However, this approach can sometimes result in poorly designed contracts, leading to confusion for the team in managing them going forward.
Inefficient Initial Price Setting Mechanisms When launching through traditional DEXs, a crucial decision revolves around determining the amount of ETH committed to liquidity. Adding more ETH to liquidity results in a higher starting price and reduces price volatility. However, to achieve a higher launch price, a greater amount of ETH must be committed, which can become expensive.
Investors
Dead Liquidity Our definition of "dead liquidity" is when trading activity comes to a halt, and the project seems to be inactive. However, there may still be a substantial amount of ETH remaining in the liquidity pool, either due to LP burns or LP locks. For investors holding tokens of a project that has become dormant, the cost to sell those tokens can often exceed the value they would receive, leading investors to write off these tokens as losses. In many instances, this LP remains in the pool indefinitely without any further action being taken. This is exactly why we refer to it as "dead liquidity."
Rug Pulls One of the most prevalent scams in the world of crypto tokens is known as a "Rug Pull." In this deceitful practice, a project owner dishonestly withdraws all the liquidity from the pool that traders have invested in. As a result, investors end up losing 100% of their investments.
Gas Fees On all chains, but particularly on Ethereum, gas fees represent the cost of completing a transaction. These fees can vary based on network activity, and the complexity of the transaction determines whether it will cost more or less. When swapping on standard DEXs, gas fees can sometimes be discouraging due to the contract interactions involved in a swap.
Dex Fees When swapping on most DEXs, the platform will charge a service fee, with the average fee being 0.3%. While this might not appear substantial for regular traders, especially those who engage in swing trading, it can quickly accumulate into a significant sum of fees.
Transaction Failures One of the most frequent reasons for transaction failures is insufficient slippage amount when the price moves, preventing the trade from being executed. Consequently, your transaction is reverted, and you still have to pay the gas fee. This can be highly frustrating, especially when purchasing a token with significant price action, like during a token launch. It is not uncommon for the price to increase dramatically, even 10x, within a few minutes. As an investor, you may experience multiple transaction failures before managing to enter at a much higher price point.
Contract Sells Contract sells happen when the contract collects tokens as part of its tax mechanism. However, for the project to utilize these collected taxes, it has to sell its own token. As with many crypto assets, each buy-and-sell activity usually involves project tax collection in the project token, which is then swapped to the native chain token. This is achieved by triggering the SwapAndLiquify function call on the smart contract, creating sell pressures on the project token chart.
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