Clear DefinitionsInitial Farm Offering
1 min read
Pronunciation
[ih-NISH-uhl fahrm aw-FUR-ing]
Analogy
Think of an IFO like a farmers’ market stall where you deposit produce (LP tokens) and receive a share of a new crop (project tokens) based on how much you contributed.
Definition
A token launch mechanism on DeFi yield farming platforms where users stake LP tokens to receive new project tokens in proportion to their stake.
Key Points Intro
Initial Farm Offerings distribute tokens via liquidity staking through:
Key Points
LP token deposit: Participants lock liquidity provider tokens in an IFO contract.
Pro rata allocation: New tokens allocated based on share of total LP staked.
Time‑limited event: Fixed participation window to join the offering.
Incentive alignment: Encourages liquidity provision for the platform.
Example
Technical Deep Dive
IFO contracts accept LP tokens and record deposits per address. At event close, total LP and per‐user LP amounts are used to compute allocation ratios. The contract then mints or transfers new tokens to participants and returns LP tokens. Smart contract includes emergency withdrawal and participation limits.
Security Warning
Staked LP tokens remain at risk of impermanent loss and smart contract vulnerabilities; only stake what you can afford to lock.
Caveat
High participation can lead to small allocations per user and potential front‐running by bots.
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