Galaxy Arena Messed Up Liquidity

Galaxy Arena Messed Up Liquidity

Today, we are going to discuss why you should almost never distribute your tokens before adding liquidity to the PancakeSwap/ApeSwap pair.

Why?

The initial price of the token is determined by the FIRST liquidity added to the pair. If the developers were to inadvertently or intentionally distribute tokens prior to launch without restricting further transfers, then any receiver of said tokens could potentially add liquidity on their own (which sets the initial reserve ratio and therefore the starting price.) This is what happened to Galaxy Arena at launch.

There were many presalers that were able to withdraw their tokens prior to the first liquidity being added.

As mentioned previously, the initial price is set by the FIRST liquidity added. As a result, one GAN token was valued around $1.13 per token. In comparison to the presale rate ($0.005 per token) according to the Poolz website, the listing rate was 226x higher than the presale tokens

To make the matter worst, the Galaxy Arena team decided to only add 200 BNB ($120,000) around into the liquidity once they figure out how to balance the ratio by adding more tokens into the reserve to balance out the price. The project owner collected $800,000 from ApeSwap IDO and $200,000 from Poolz but ended up adding around only 200 BNB to the liquidity.

The result of this mistake made by Poolz is the chart looking like it’s rugged.

Learnings

• As an investor, you should be asking the project owners about the listing price as well as how much liquidity and tokens will be added into the pair, so you can make the educated decision on whether to invest your money or not.

Disclaimer: Not financial advice. Do your own research.