Liquidity

For a token to have a price it needs to be traded. This price can only emerge when there's liquidity: a trading pool where your token can be exchanged for another asset.

When the trading pool is first launched, it only contains some amount of the token created. The pool starts with none or very little of the asset that the token is paired with. This means that tokens allocated to the app vault cannot all be immediately sold. This will only be possible when the pool has been filled up with enough liquidity of the pairing asset through open market trading.

This kind of liquidity setup is referred to as single sided liquidity or one sided liquidity. The following image shows the starting asset balances when the trading pool is first created:

When the presale completes, Metal will launch the liquidity pool and use half of the presale proceeds to buy the token from the pool. The other half is used to buy the coin from the app vault. The pool deployment and token buy is done in one transaction. This means when the pool goes live, the pool has some amount of the pairing asset (for example ETH) and a lot of the appcoin.

And as the coin is traded, the balance of your coin and ETH fluctuates:

Launching a liquidity pool with single sided liquidity is capital efficient, because you do not need to put up any of the pairing token when the pool is launched. It also means that your application must be valuable enough for the market to buy your token from the pool.

Summary

When you create an appcoin presale on Metal:

1. A portion of the total supply is reserved for liquidity.
2. The pool is only launched when the presale completes.
3. The pool is launched with half of the presale proceeds.