The Liquidity Pool (LP) of Diamoons DeFi Token

What is a liquidity pool, and why is it important?

Liquidity Pools, or LP, are a core financial infrastructure in the set up of Diamoons. The initial deployement of the LP determined the market capitalisation and price of each token.

The co-founders of Diamoons supplied the initital liquidity of both $BNB and $DMOON to the Decentralized Exchange (DEX) PancakeSwap (there was no pre-sale) and received in exchange LP tokens. We will return to LP tokens later on.

Diamoons began trading in the PancakeSwap DEX with an initial liquidity of about 5,000$ and a market cap of about 40,000$. The tokenomics of Diamoons includes a 5% tax (among other taxes) on all buy & sell transactions, which is then sold in the market in exchange for $BNB and brought to the LP. This happens when the smart contract accumulates 250B $DMOON in liquidity taxes, and it is how the liquidity of Diamoons keeps growing on a daily basis. This is how the pie gets bigger, and its how long-term stability is created.

At the moment Diamoons has only one LP paired with $BNB, but other pools with other pairs can and will be created in the future, on PancakeSwap or other DEXs that support the Binance Smart Chain (BSC). So in a couple months or years you will be able trade $DMOON with $BUSD, for instance.

So what about LP tokens — what are they?

When an investor supplies liquidity to an LP, they receive in exchange LP tokens from the DEX. Each LP token is worth what the total LP is worth divided by the number of LP tokens. The number of LP tokens is determined by the number of participants in the pool, and how much initial liquidity was supplied. In Diamoons the LP tokens are unimportant since we have a locked liquidity and LP tokens are locked forever (burned).

However, other LP can and will be created on PancakeSwap or other DEXs by the Diamoons team or investors, and they will receive LP tokens from different DEXs. Each DEX divides the fees differently, so investors need to do their research before opening a new LP.

In conclusion, the Liquidity Pool (LP) is a key feature in the general technological infrastructure of Diamoons. The way it interacts with the tokenomics of the smart contract, the decentralized nature of the pool, the inter-activitity with other pools and DEXs in the future, and the LP tokens are all a fantastic innovation which has enabled the creation of Diamoons in a secure and inexpensive environment.