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What Is the Role of a ‘Liquidity Pool’ in a DAO’s Initial Capital Formation?

A liquidity pool holds paired tokens (e.g. native token/stablecoin) to facilitate decentralized trading and establish an initial market price.
Greeks.Live15.11.25

What Is the Role of a ‘Liquidity Pool’ in a DAO’s Initial Capital Formation?

A liquidity pool is a collection of funds locked in a smart contract, facilitating decentralized trading. For initial capital formation, a DAO can pair its native token with a stablecoin or major cryptocurrency in a pool.

This provides the necessary market liquidity for the token, allowing investors to buy and sell. It is a key mechanism in an IDO to establish an initial market price.

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