Patching DEX Liquidity

Cake Monster liquidity has been the elephant in the room for a little while now. Since the last major pump, it’s been clear that for a project as popular and established as Cake Monster, we must improve our liquidity.

And improve it we will, in earnest.

This article serves to be the first step in outlining some of the changes we’re going to make, and the direction we’re going in regarding improving liquidity.

Intro 🎬

Cake Monster is a success. Everyone knows about Cake Monster, we’ve chatted with some of the biggest names, influencers, and projects in the space. We reached a $200mil market cap and we’re consistently ranked in the Top 10 “Meme Tokens” for social score, despite us being much more than just a Meme Token.

We could not have done that without the help of our strong and engaging community! 💪

We’re big. But we want BIGGER.

Monsta Party was a large step into expanding the Cake Monster brand and we have infinite opportunities for expansion there. We’re currently increasing the team size significantly to be able to satisfy our Monsta Party developments.

However — and here’s the kicker — as our brand, community, and virality exploded, our liquidity did not match it, and it has left us with the liquidity issues we have today.

Big trades can affect the price significantly and dramatically. We have large holder wallets that could potentially affect the price with big sells, even though we all know that the majority of our Cake Monster whales are very strong believers and holders. Those large wallets poses a risky proposition for other experienced traders and anyone who wants to invest a substantial amount of capital.

Whales 🐋

No whales will invest significant capital into Cake Monster with the currently provided liquidity.

Experienced traders see our low liquidity and know that unless they buy as part of a frenzied pump, any big buy they make will be used as exit liquidity… $MONSTA holders sitting on the sidelines will see the huge price increase and quickly take profits. It’s rational, however, it’s also not very sustainable.

Cake Monster is volatile.

Regarding the whales, we know this, because — aside from it being obvious — we’ve spoken to a number of experienced traders who love the Cake Monster protocol and the brand, yet wouldn’t enter because of the liquidity problem.

Large investors being used as exit liquidity isn’t the only issue. There is also the simple fact that big trades have a huge price impact, and this results in the trader getting less of the token for their money. More on this later.

God Candles 🙏🏻

Ahhh… Monsta Party and those magical God candles. Fun? Yes. Beneficial to the project? No.

Proof of holders using “whale buys” as exit liquidity is easy to find. Look at what happens with the first god candles from the Monsta Party proceeds…

Every time there was 100 BNB buy, within 5 minutes it’s been used as exit liquidity, and price returns back to where it started or ends up at a lower point. This is simply throwing money away and does nothing to benefit the project in the long term.

Continuing to do this would waste the remaining 1662 BNB we have available, which could be used much more effectively!

No More God Candles ❌

So... No more God candles. They were fun while they lasted. But our burning issue is… We need liquidity. And here we have an extremely easy first step to acquiring it.

We’ll pair the remaining 1662 BNB proceeds from the Monsta Party minting with the equivalent amount of MONSTA from the community wallet and we’ll add to LP.

This will boost our liquidity from the current size of $874,420, up to a much healthier size of $2,865,540.

A Deeper Look…🔎

Here we have our current liquidity in PancakeSwap.

To illustrate our poor liquidity and how much it will be improved by adding the Monsta Party proceeds, let’s do a few calculations…

LIQUIDITY USD: $874,420
LIQUIDITY:
725.95 BNB + 36,790,000 MONSTA
MARKET PRICE: 0.00001973226 BNB per MONSTA

Let’s see the price impact for a 100 BNB buy (-0.25% DEX fee).

Currently 100 BNB = ~ $60,000.

Let’s just check their math first…

NEW BNB AMOUNT: 825.70 (725.95 + 99.75)
NEW MONSTA: 32,345,525
NEW LIQUIDITY: 825.70 BNB + 32,345,525 MONSTA
MONSTA RECEIVED: 4,444,475 (old MONSTA amount — new MONSTA amount)
PRICE PER MONSTA: 99.75/4,444,475 = 0.00002244359 BNB
OLD MONSTA PRICE: 0.00001973226 BNB
PRICE IMPACT: (1-(0.00001973226/0.00002244359))*100 = 12.08%

Ok, so for a $60,000 buy we experience a 12.08% price impact. Not so great.

After We Add Liquidity

Adding BNB + MONSTA liquidity using the Monsta Party proceeds would add the following extra to liquidity:

  • 1662 BNB
  • 84,236,542.08 MONSTA

This results in the following:

NEW LIQUIDITY USD: $2,865,540
NEW LIQUIDITY:
2387.95 BNB + 121,026,542 MONSTA
MARKET PRICE: 0.00001973079 BNB per MONSTA
A big liquidity pump

Let’s see the price impact for that same 100 BNB buy…

NEW BNB AMOUNT: 2487.70 (2387.95 + 99.75)
NEW MONSTA: 116,173,707.103
NEW LIQUIDITY: 2487.70 BNB + 116,173,707.103 MONSTA
MONSTA RECEIVED: 4,852,834.977
PRICE PER MONSTA: 0.00002055499 BNB
PRICE IMPACT: 4.01%

So. It’s not perfect, but it’s getting there.

We now have a MUCH improved and reduced price impact for the $60,000 buy, reducing down to 4.01% from the previous 12.06%.

This improvement is really significant, as it results in the buyer gaining an extra 408,359.98 MONSTA for their trade. This is the type of stuff that attracts bigger investors: more price stability and more MONSTA for their money.

Locking Liquidity

The additions to liquidity will be completed today (Nov 21st) and locked via the Unicrypt Token Locker Service for a period of 6 months.

After this initial lock-up period and an analysis of the protocol impacts, the lock will be extended further. Proof of the liquidity lock will be added to this article upon completion.

Early Crumbs 🥞

We know there will be many that were looking forward to the God Candles and there might be some initial disappointment in the changes, but pivoting towards adding liquidity instead will strengthen the protocol and bring better value for holders.

To kick things off and celebrate this essential liquidity improvement, we’ll be performing a special burn of 25 million MONSTA tokens which will trigger crumb rewards for all holders!

Approximately 55,000 CAKE tokens were added to the vault since the last crumbs claim, so you can expect this drop to be especially delicious 😋

Liquidity Phase 2 🧭

Adding too much liquidity too quickly can also have the opposite effect to what we see now. Rather than the MONSTA price being volatile as it is currently, the price could stagnate.

The Future

Cake Monster is programmed. We all know what it is programmed for. We have one last leg up before we start devouring the doggies. And now is the time we start it.

As mentioned above, with the immediate Monsta Party liquidity addition, we have the following:

LIQUIDITY USD: $2,865,540
BUY:
$60,000 (100 BNB)
PRICE IMPACT: 4.01%
RECEIVED MONSTA: 4,852,834.977
EXTRA GAINED COMPARED TO CURRENT LIQUIDITY: 408,360 MONSTA

With $5,000,000 in liquidity…

LIQUIDITY USD: $5,000,000
BUY:
$60,000 (100 BNB)
PRICE IMPACT: 2.43%
RECEIVED MONSTA: 4,932,622
EXTRA GAINED COMPARED TO CURRENT LIQUIDITY: 488,147 MONSTA

With $10,000,000 in liquidity…

LIQUIDITY USD: $10,000,000
BUY:
$60,000 (100 BNB)
PRICE IMPACT: 1.23%
RECEIVED MONSTA: 4,993,368.2
EXTRA GAINED COMPARED TO CURRENT LIQUIDITY: 548,893.2 MONSTA

As you can see, the increase in liquidity becomes less significant for the $60,000 buy. By far the BIGGEST improvement we will make will be the immediate liquidity addition from the Monsta Party proceeds.

These bigger liquidities of $5–10 million (and more) are required for even BIGGER trades.

This is where we want (and need) to be, in the near future. We want to attract $1mil+ trades. We have the protocol. We have the brand. We have the future developments. Only poor liquidity can hold us back.

Getting More Liquidity

In order to reach these much higher liquidity levels, we need to go above and beyond. We’re exploring many options and we’ll choose the option that best benefits the protocol.

There will be a number of other protocol improvements (e.g. Auto-Cash Out optimization) in the coming weeks that will incrementally improve the liquidity. However, to be truly impactful and increase the liquidity significantly, we must implement something special. Something monstrous.

Stay tuned. We’re in the design phase of a staking program and it’s going to be extra special.

Cheers! 🍻

About Monsta Party

With Monsta Party NFT’s you will earn Party XP (PXP), level up your own algorithmically generated NFT’s and compete with others for the hottest spots on the dance floor as you climb the leaderboards to earn the sweetest buffet rewards! With over a million possible combinations, the Monsta Party NFT collection includes 150+ custom properties (e.g. headpieces, glasses, hairstyles, accessories, clothing, etc.), 20+ super rare NFT’s and about 10 animated deluxe traits!

Everything is handmade and designed with crazy love by our incredibly talented Monsta designers! What is a great Monsta Party without fresh and funky looking Monstas!?

About Cake Monster

Dive into the furry world of a super deflationary multi-feature and dividend yield token on BSC with cute memes, hairy NFTs, delicious community rewards and much much more sweet ingredients, RAWR!

Cake Monster ($MONSTA) offers a multitude of great features aimed at building a flexible and multifaceted dividend yield and reward system for participants without compromising the sustainability or security of the ecosystem and combines this with smart design, creativity, and organic growth.

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A hyper-deflationary and elastic supply token that has unique reserve and reward mechanisms featuring an automated hybrid monetary policy.

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Cake Monster

A hyper-deflationary and elastic supply token that has unique reserve and reward mechanisms featuring an automated hybrid monetary policy.