Introducing: Social Liquidity Pools

The next ParJar Wallet feature is going to be nothing short of category defining.

When Jeff Bezos launched Amazon in 1994, it was an online bookstore. He launched a product into a niche market segment that he could capture and leverage for his next product. Then he did it again, and again, and again until we have the Amazon you see today. He’s famous for championing the Day One mentality that’s driven every decision at Amazon since its beginning.

Jeff Bezos explores graffiti artists as a potential first customer in the dot com bubble.

A Day One mentality means having an obsession with your users. It means having the ability to execute high-velocity, quick moving decisions on a large scale. It means finding and embracing emerging trends and capturing them in a way that only your product can. Today, that’s where we are at Parachute; Day One.

With a network of 40k users, 700 groups, and 45 project partnerships within a single product that connects them all, Parachute is primed for something big. Over the last year, we’ve pushed out the internet’s best chat-based wallet, we’ve added systems that allow people to move from their cash to crypto, and we’ve recently launched our first of several DeFi portals with a gold-standard experience for swapping the tokens you have for the tokens you want.

With a robust product, strong partnership network, and the best community in crypto, we’re introducing something very big today — Social Liquidity Pooling.

The problem

Uniswap pools have changed how people interact with cryptocurrency in a major way. If you’re unfamiliar with Uniswap, it’s a DeFi protocol that lets anyone add liquidity (ETH + an equivalent dollar value of a token) to a pool (a collection of liquidity from anyone, anywhere in the world.) Today, the main incentive for adding liquidity is that you make a % of fees on every trade in the pools you participate in.

This graph looks way better than the ones on UniswapROI.com

The biggest risk in adding liquidity is something called Impermanent Loss. This roughly means that if you put $500 of total liquidity into the pool, you’ll always take out $500 + your collected fees out of the pool. While that might sound like a good deal, it also means if the value of your token goes up while it’s in the pool, you’ll get back less tokens and more ETH than you put in. (Conversely, if the price of your token goes down after you add liquidity, you’ll get more tokens and less ETH when you remove it.) Basically, your $500 bucks will always stay at $500 bucks. (*Note- It is more complicated that this —the initial liquidity is always subjective to value changes of the assets. For the sake of this article we have simplified the description of liquidity pools. Always DYOR.)

By nature, these programs are confusing, data driven, and isolating. Even though there’s a thousand people in the pool with you, it feels like you’re swimming alone. On top of that, when you provide liquidity early on, there’s a risk of watching your favorite token rise while you miss the train and have nothing to show for it. These are downward drivers for the average person wanting to contribute to liquidity pools. It’s the type of problem Parachute was made for, and one our novel approach can fix.

The current solution (pre-Social Liquidity)

Candid shot of a current day liquidity provider and the project they support.

Liquidity on Uniswap has become fundamental to the next wave of startups. For projects at any market size, the ability to create consistent liquidity often comes down to providers factoring the risk of impermanent loss vs the intake of collected fees. Sites like UniswapROI exist solely to calculate this risk for liquidity providers. All factors being known, for many people supporting early stage projects the incentives to provide liquidity is not as favorable as they would hope.

Over the last several months, projects (including our own) have come up with a few ideas. A popular current solution is to incentivize liquidity providers by giving them extra project tokens from a company pool. This is an approach we ourselves are currently doing. This incentive correlates to the current drivers of providing liquidity in that you receive a set return based on what stake for a set period of time.

While this has shown to be an effective driver for launching liquidity programs and creating a diverse group of liquidity providers, it doesn’t speak to the full experience people are wanting from adding liquidity to support their favorite projects. So, what else can be factored in?

Since launching our first incentive driven pool, we’ve carried the Day One mentality with us every day. We’ve pushed our community to find what people really wanted out of participating in these pools. We’ve seen what worked in our first program, as well as what failed miserably. We’ve made big decisions and worked quickly to bring a solution to market. Today, we’re announcing what that solution is.

Introducing: Social Liquidity Pools

Yep, it’s another Nemo reference. This is what Social Pooling does to Uniswap liquidity.

In the coming weeks, we’ll be launching Social Liquidity Pools directly in the ParJar app. At its core, it’s a no-frills ways to add liquidity to your favorite project in a click. No geeky interface, no Metamask, just the easiest way to support your favorite projects that you’ve ever experienced.

Now for the good stuff. Because we’re running liquidity through the ParJar Wallet, we’re able to create a new way for liquidity providers to interact with the projects they support like never before.

When we launch, you’ll be able to stake liquidity for Parachute and your favorite projects directly from the ParJar Wallet. In return, you’ll get the normal transaction fees + additional tokens from each project based on: 1) how much you stake, and 2) how long you stake it for. You’ll also get access to a game changing feature we call Social Liquidity.

Social liquidity takes the concept of token-permissioned groups and applies them to projects and their liquidity providers. We’re launching a simple portal that allows people to stake liquidity in their favorite projects to unlock access to limited access communities.

These communities are run by the project and create a space where a projects biggest supporters and its team members can connect in a deeper way. It’s all the things you love about community in a smaller focus group for heavy supporters.

Using Parachute as an example, here’s the total sum of what staking liquidity through ParJar wallet could look like for the average user:

  • Automatic entry to monthly PAR giveaways with a monthly PAR % distributed to your wallet for staking liquidity. (The primary driver)
  • Access to a token-permissioned group specifically for our liquidity providers (Social Liquidity perk)
  • In-app airdrops from new partner projects launched through the Social Liquidity program within the group.(Social Liquidity perk)
  • Early Access to our new products and features within the group. (Social Liquidity perk)
  • Access to the next 100 social liquidity programs launched through ParJar (Social Liquidity perk)
  • As the pool grows, so do the giveaways. (Social Liquidity perk)

In addition to our own Social Pool, we plan on launching with a few of favorite projects to allow thousands of liquidity providers to get more from their tokens early on. Each project will have the ability to customize its liquidity staking return, as well as form its own Social Liquidity Perks.

This makes the PAR Social Liquidity Program a game changer for how projects and their liquidity providers connect going forward. Our target is to bring on new projects and liquidity providers at scale. In line with our ethos from day one, ParJar Wallet will be THE place where people come to find their favorite projects, amazing Social Liquidity programs, and the portal to get involved with those projects in a deep and meaningful way.

By providing liquidity through ParJar, you can get more than just the % of fees. You get extra returns + the perks projects want to give their supporters. This is what projects want and what ParJar Social Liquidity finally lets them do. It’s Uniswap meets ParJar on a whole new level.

How it goes from being an idea to living in your hand

The first phase will be a proof of concept for our own pool. We’ll be launching the feature of adding liquidity to PAR/ETH on Uniswap through ParJar in early September. If you haven’t done it already, jump into our Beta Tester Group to get early access.

Next, we’ll be announcing the first PAR program rewards, events, and groups. Users will be able to stake ETH and PAR through ParJar to participate. We’ll announce the return rate we offer + an outline of our own social liquidity program for community members wanting to go beyond just the returns. (If you are participating in the current Uniswap based liquidity pool, you’ll be grandfathered in through October 15th.)

Soon after launching, we’ll be announcing our first series of liquidity staking partners. As we evolve ParJar to a fully decentralized, non custodial solution, our portal will expand to allow a fully integrated social liquidity staking program via smart contract. This means fully decentralized project proposals that are selected by the community through our PAR Governance program.

Looking forward.

This is just the beginning for Parachute. This is our second major leverage of the ParJar Wallet platform and just the first mile of the next hundred to come. Tomorrow, it’ll be Day One again at Parachute HQ. As we grow, we’ll always be in position #1 to find new and emerging trends, explore them obsessively with our amazing community, and truly build the products people love to use. Viva la Parachute.

— Captain Parachute

aka — Lindsey Winder, Co-founder.

The community for exploring ideas in crypto