bZx token listing once again sheds light on issues with DEX offerings

bZx, a decentralized loan platform, opted to distribute its token through Uniswap v2. The team seeded the pool with $500k, and in the same block, a bot was able to purchase 650 ETH worth ($156,000) of bZx which increased the price by 12x after listing at $0.04. As other traders wanted to front-run this offering, the bots were able to sell into the buying pressure making around half a million dollars in the process. After reaching a high of $0.60 the token price has since settled to around $0.14.

Why it matters

• UMA had a similar DEX offering in April that ended very similarly, with a massive price increase in the first few blocks before dropping precipitously yet still settling well above listing price. This has to do with the dynamics of them being priced on an automated market maker (AMM) with little to no outstanding tokens able to decrease the price. Since the only interaction with the pools are to purchase the token, the price can only go up.
• Tomorrow stablecoin aggregator mStable will be releasing its token in a similar manner on Balancer. Given how the prior attempts have turned out, it is expected to turn out similarly. As more projects look to list tokens through DEXs, they will need to start experimenting with other methods that could provide more equitable outcomes.