Understanding Deepr’s Liquidity Dynamics: FDV vs. LP

The relationship between a token’s Fully Diluted Valuation (FDV) and the depth of its Liquidity Pool (LP) is crucial for its stability, tradability, and resistance to manipulation. The following charts illustrate how Deepr’s model for liquidity scaling compares to Pump.fun and a typical “Traditional Launch” model across various FDV milestones.

Visualizing Liquidity Growth

These charts plot the Liquidity Pool size (in USD) against the token’s FDV (in USD).

FDV vs LP - Launch to $2M FDV

FDV vs LP - Launch to $10M FDV

FDV vs LP - Launch to $200M FDV

FDV vs LP - Launch to $1B FDV

Analyzing the Curves

The curves in the charts represent the following launch model assumptions:

Deepr.fun (Purple Line): Illustrates the liquidity curve assuming each tranche sells out 100% at its specific unlock price, triggering the Smart Liquidity Scaling.
Pump.fun (Red Line): Represents the liquidity curve after its initial bonding curve phase, once the token is listed on a Decentralized Exchange (DEX) with its characteristic low initial liquidity.
Traditional Launch (Blue Line): Depicts a scenario where 100% of the token supply is paired against a small, fixed amount of initial liquidity (e.g., equivalent to 2 ETH, assuming ETH at $2500 and SOL at $170 for comparative context in some traditional scenarios) on a DEX from the outset.

The Role of AMM Mathematics in Price Discovery

Before analyzing how each model’s liquidity pool (LP) scales, it’s important to understand the fundamental Automated Market Maker (AMM) mathematics that govern price movement within the liquidity pool. The price of a token in a standard Uniswap V2-style AMM is determined by the ratio of the two assets in the pool, following the constant product formula (x * y = k).

When a swap occurs (e.g., a user sells Token X to receive Token Y), the amount received is calculated considering the pool’s current balances and a swap fee.

This AMM formula is critical because:

Price Impact: Every swap changes the x and y balances in the pool, thus altering the token’s price.
Tranche Unlocking for Deepr: The market price, as determined by these AMM dynamics in the DEX pool, is what Deepr’s DeeprTemplate contract monitors. When the market price of the project token (Token Y) reaches or exceeds initialPricePerToken * priceMultiples[i], the corresponding tranche i becomes available for purchase.

Understanding this core AMM mechanic is key to seeing how organic trading activity influences the price, which in turn triggers the programmatic liquidity scaling events in Deepr’s model.

`Deepr.fun` (Purple Line)

Deepr’s liquidity growth is characterized by a stepped pattern. This is a direct result of its Progressive Supply Release and Smart Liquidity Scaling mechanisms, assuming tranches sell out completely upon unlocking:

Initial Liquidity:
- Tranche 0 (22% of total supply) is sold to raise the initial ETH.
- Once Tranche 0 is sold, this ETH is paired with another 22% of the total supply to create the initial liquidity pool. The FDV at this point is determined by initialPricePerToken * totalSupply, and the initial LP is approximately 2 * ETH_raised_from_Tranche0 (minus any fees if they were applied at this very initial stage, though primary fees apply on subsequent tranche sales that add to LP). This establishes the first point on the purple curve.
Stepped Increases from Tranches 1-13:
- These 13 subsequent tranches (holding a combined 28% of total supply) unlock based on market price milestones (initialPricePerToken * priceMultiples[i]).
- When users purchase tokens from these active tranches, the DeeprTemplate contract automatically takes the ETH paid (minus a 10% fee) and the corresponding amount of tokens (minus a 10% fee on the token portion) and adds them directly to the DEX liquidity pool.
- Each “step” upwards in the purple line typically represents a significant amount of tokens being bought from a newly unlocked or active tranche, leading to a substantial injection of new liquidity. The height of the step is proportional to the amount of ETH and tokens added.
- Between these major steps, liquidity can also grow more gradually as smaller purchases from the current active tranche occur.

Mathematical Implication: Deepr’s LP doesn’t just grow organically with trading volume; it’s programmatically augmented at specific, price-defined intervals. The total LP (V_L) can be conceptualized as growing with each successful tranche sale that contributes to liquidity.

`Pump.fun` (Red Line)

The red line, representing Pump.fun, shows the liquidity dynamics post-bonding curve:

Low Initial DEX Liquidity: After the bonding curve phase (e.g., reaching a ~$69k market cap on Solana), Pump.fun typically migrates the token to a DEX (like Raydium) with a small, fixed amount of initial LP (e.g., ~$12k). This is the starting point of the red curve on the DEX.
Slow Subsequent LP Growth: After this initial DEX listing, liquidity growth is primarily organic (from trading fees or manual additions, if any) and tends to be very slow relative to FDV, as the model does not inherently scale liquidity aggressively.
The charts show this model consistently results in the shallowest liquidity pool compared to Deepr and Traditional Launches, especially as FDV increases. This makes tokens highly susceptible to price volatility and manipulation.

Traditional Launch (Blue Line)

The blue line represents a generalized “Traditional Launch” where the entire token supply is made available against a minimal initial liquidity pool from the start:

Fixed Small Initial Liquidity: This model assumes 100% of the tokens are paired against a small, fixed amount of initial liquidity (e.g., the USD equivalent of 2 ETH, which would be $5000 if ETH is $2500/ETH) on a DEX. The FDV can increase, but the LP depth only grows organically from there (e.g., through trading fees), if at all. The $170 SOL price is relevant for understanding initial liquidity values in Solana-based traditional launches that might be compared against.
Organic LP Growth (Potentially Stagnant): Liquidity may grow slowly and smoothly if trading activity generates fees that are reinvested, or if there are other manual additions. However, without automated scaling mechanisms, the LP can easily become insignificant relative to a rising FDV.
While potentially starting with more LP than Pump.fun on the DEX, this model typically doesn’t achieve the same liquidity depth as Deepr at higher FDVs due to the absence of automated, significant liquidity injections tied to market cap milestones or progressive sales.

Key Takeaways from Deepr’s Model:

Proactive Liquidity Scaling: Deepr is designed to systematically increase liquidity depth as the token’s market capitalization grows and predefined price targets are met.
Enhanced Price Stability: Deeper liquidity pools can absorb larger buy and sell orders with less price impact, leading to more stable price action.
Reduced Slippage: Traders experience lower slippage costs, making the token more attractive and efficient to trade.
Increased Manipulation Resistance: It becomes significantly more expensive and difficult to manipulate the price of a token with a deep liquidity pool.
Structured Growth: The tranche system ensures that liquidity is added in a structured manner, aligning with the token’s market maturity and adoption.

By programmatically linking liquidity growth to market performance through its tranche sales, Deepr aims to create a healthier and more sustainable trading environment from launch through various stages of market cap development. The mathematics behind the DeeprTemplate contract ensures that as each progressive tranche is successfully sold, a significant portion contributes to strengthening the foundation of the token’s market on the DEX.