SecondSwap - Unlocking Token Liquidity with

Decentralized Secondary Trading Platform March 1, 2024

Problem Statement

Liquidity Dilemma:

Numerous token holders, in particular early investors, face the issue of tokens being locked or vested for extended periods, originally designed to prevent rapid market sell-offs and subsequent price volatility. This lack of liquidity can be a significant concern, especially if investors need to access funds or adjust their portfolios in response to market conditions. Further, if the project undergoes changes or faces challenges during the lock-up period, investors may find themselves unable to respond or exit their positions.

Similarly, new investors interested in investing in promising projects do not always have access to early funding rounds. As a result, there is an underserved market whereby savvy investors are able to build positions in promising projects and agree to accept the original vesting schedules. These higher conviction owners set new floor prices for tokens while diversifying the ownership base of successful projects.

Lastly, protocol owners remain susceptible to rapid sell-offs despite vesting conditions when original investors seek liquidity at the earliest opportunity. To resolve this issue, protocol owners are often asked to manually approve SAFT transfers from original investors to new higher conviction investors. They do so to minimize token sell-offs when vesting occurs as new investors have higher co

Question 2

Glossary of Terms

Accepted Answer

| Term | Description | | ---- | | FDV | Fully diluted value, the total market cap of a cryptocurrency token if the entire supply of that token was in circulation. | | Cliff period | The initial phase of a vesting schedule during which no tokens are granted. | | Vesting schedule | The timeline which outlines the granting of tokens i.e. when they are claimable. The vesting schedule is based on a linear distribution across the vesting period. Note that the vesting period must include the cliff period. e.g. if a token has a cliff period of 3 months and the vesting schedule is to distribute the tokens over 12 months, the total vesting period is 15 months. | | Vesting contract | Smart contract used in the blockchain and cryptocurrency space to manage the distribution of tokens over a specified period. This type of contract ensures that tokens are released to recipients (investors) gradually, rather than all at once, in accordance with a predetermined vesting schedule. | | Discount rate | The discount to the price for a lot. There are two types of discounts available for the seller to set:- “linear” which is a proportional discount that scales with the quantity of tokens being purchased or “fixed” which is a set discount on the purchase price. | | Unlock start date | The date when the vesting schedule begins and tokens begin to be granted. This date is at the end of the cliff period when no tokens are granted (note: month = 30 days, week = 7 days, day = 1 day). | | Cycle based vest

Question 3

Connecting your wallet

Accepted Answer

Before being able to access buy/sell functions in the marketplace, you need to connect your wallet. The marketplace will send a wallet signing request. Use your preferred wallet to sign the request. The example below is based on a MetaMask wallet:

Click on "Connect Wallet".

Select the option that applies. SecondSwap supports WalletConnect, MetaMask, Trust Wallet and many other solutions. In this example, we will use MetaMask.

Follow the Metamask prompts to log in. Confirm the connection request by clicking "Connect". If prompted to sign a test message, please click "Sign".
You are now logged in.

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