Today you will learn to navigate the four main phases of Rocket Joe’s launch events; Deposit, Withdraw, Launch and Farm.

Rocket Joe is a liquidity launch platform, with a fair market price discovery mechanism, protecting users from front-running bots and raising organic and sustainable liquidity for protocols. Users of Rocket Joe will gain access to newly issued tokens, before they enter the open market. Users also participating in Rocket Joe will often be rewarded with ‘Bonus incentive tokens’.

The article below is made up of examples and is not meant to represent a ‘typical’ launch, as each event will have its own parameters and market conditions. This session does however aim to give a realistic insight into the process of Rocket Joe’s phases and the general rewards and risks associated with entering Launch events.

Volly wants to participate in XYZ’s launch on Rocket Joe. First, they need to stake JOE for rJOE in the Launch page. rJOE accumulates over time, so Volly will need to claim any pending rJOE before they are able to enter the launch event.

Volly enters the XYZ token launch event during the deposit phase and deposits 5 AVAX, saving 200 rJOE (2 AVAX), which they can use at any time.

As it stands, Volly will have a 0.05% share of the Pool when the LP is released, however, if the amount of AVAX deposited changes, Volly’s share of the Pool will also change. In Rocket Joe, the issuing token price will increase or decrease depending on the amount of AVAX that is deposited or withdrawn.

Is Volly is unhappy with the current XYZ Token Price, Volly can withdraw during this deposit phase. Withdrawal fees are 0% during the first 24 hours and on a linear scale in the remaining 24 hours, up to a max of 50%.

The deposit phase ends and the total AVAX currently in the pool has increased and the price of AVAX has also increased:

In the Withdraw phase, participants may withdraw their AVAX for a fixed penalty of 20%. If Volly were to withdraw their full AVAX deposit before the LP creation they would lose 1 AVAX (0.2 * 5 AVAX).

Volly decides to not withdraw their deposit because they speculate token XYZ will continue to appreciate in value after the unlock and they do not want to lose the 1 AVAX to the Withdrawal fee. Furthermore, there is an additional 10% of XYZ tokens which will be claimable to participants as bonus rewards, based on their share of the pool.

Volly’s share of the rewards will likely offset any impermanent loss and is more attractive than losing 1 AVAX worth $75 as a withdrawal penalty.

The launch day arrives, meaning that Volly’s 5 AVAX will be turned into an LP. Volly now receives a 50:50 LP token, where AVAX is equally split into AVAX and issuing token. This LP is locked for up to 7 days.

The amount of AVAX tokens in the pool has decreased and the price of AVAX has changed again.

Volly’s final share of the pool is 0.03125% and they will receive a share of the additional incentives worth 62.5 XYZ ($36).

The LP is now created from Volly’s 5 AVAX.

Volly’s tokens are now locked in the pool and the price of 1 XYZ has been established at $0.576. The token is now available for trading. During this time, the price of XYZ will either increase or decrease based on market activity.

Volly waits until the LP tokens unlock, at which time Volly can Farm for additional incentives or withdraw their LP. During this time the XYZ / AVAX LP may experience impermanent loss.

If Volly had held the 5 AVAX in their wallet, the AVAX tokens would have been worth $360. Assuming the prices remain the same (which in DeFi is unlikely), and Volly decides to dispose of the LP upon unlock, Volly would realize a loss of $32.4.

Luckily, Volly still has $36 from the pool incentives, so they have still made a profit of $3.60.