Pencils Protocol initially planned its product layout carefully, intending to launch three core segments in succession: Farming, Vaults, and Auction. After the gradual launch of the Farming and Vaults products, they received a positive market response within the Scroll ecosystem. Ultimately, in early November, the Auction segment, centered around the LaunchPad feature, went live, perfectly completing the entire product system.
Focusing on the Auction product itself, it is primarily positioned as a Launch platform for Scroll ecosystem projects, supporting high-quality projects on Scroll to better achieve early launches and seamlessly connect directly with community users. From the user perspective, it aims to help the Scroll ecosystem community and users directly connect with high-quality projects in the ecosystem, retaining value within the community through a unique LaunchPad mechanism. The Auction product will become an important bridge for users to deeply explore early opportunities in the Scroll ecosystem.
1. LaunchPad Kaleidoscope, integrating various auction methods
The Auction segment of Pencils Protocol is positioned around the LaunchPad, providing a series of token launch strategies for projects going live, including classic English auctions, Dutch auctions, fixed-price auctions, as well as batch auctions and liquidity bootstrapping pools (LBP).
In fact, the flexible and diverse auction options can meet the market needs of different projects. For example, English auctions are suitable for situations where assets are scarce and demand is high, while Dutch auctions can quickly facilitate transactions and improve market efficiency. LBP can help new projects gain liquidity in the early stages by gradually lowering token prices, while also avoiding excessive price fluctuations, making risk management easier.
From the user perspective, different auction strategies can attract more types of investors, increase market participation, and meet the needs of different users and investors by providing flexible options that adapt to various market environments and trading strategies.
The diversified Launch options will become one of the very important segments of the Scroll ecosystem.
2. Undervalued listing strategy, multiple returns as a foundation
In addition to the diverse auction methods, another highlight of the Auction is its undervalued token listing strategy, which offers users the expectation of multiple returns. For instance, if a Scroll ecosystem project is valued at 10 million USD, it may be valued at 1 million USD during the Auction, and the Launch token price will be calculated based on this.
This means that the price at which community users acquire tokens may be one-tenth or even lower than the actual market value when the tokens are launched. We can simply understand this as a super discount LaunchPad. Therefore, even if the token performs poorly in the secondary market, users can still expect to achieve multiple returns.
In fact, the projects that can go live on Auction are all high-quality projects within Scroll, and the projects launched in each LaunchPad session typically release only a small amount. For users who want to participate, they need to first lock a certain number of DAPP tokens in the Auction DAPP token pool to obtain allocation and discount distribution, making Auction an important scenario for empowering DAPP tokens.
Currently, the Auction LaunchPad is about to welcome its first Launch project, Rho Markets, with the Launch Pool staking about to open (app.pencilsprotocol....). User participation in DAPP staking will be related to the allocation of the first Launch project.
Additionally, the DAPP staking activity in the Farming product has started on November 12 and will end on November 25, with a non-activity period APY of 20%, while the first week of the activity has an APY of 2 times, i.e., 40%, and the second week will be 1.5 times, i.e., 30%.
3. The wealth effect of transparency
The launch of the Auction product is the most important piece of the Pencils Protocol ecosystem product system, bringing a transparent wealth effect to Scroll ecosystem users.
On one hand, Scroll itself is an ecosystem in its very early stages of development. With the SCR token just entering the market, the ecosystem is in a state of full operation, meaning that the entire ecosystem pool is still in its early stages. Compared to mature on-chain ecosystems, there are more early projects worth long-term attention and deep exploration, so the potential project pool for Auction is also substantial. Similarly, for early projects in the Scroll ecosystem, these projects, which are already undervalued and have low market caps, will see their valuations compressed further after going live on Auction. As the Scroll ecosystem continues to mature, especially with the launch of the Pencils Protocol Ecosystem Hub providing market resources for more high-quality projects, several representative leaders will emerge from the Scroll ecosystem, making it a very good choice to monitor high-quality projects through Auction.
On the other hand, Auction is an important community round, and through its innovative mechanism, it is further expanding the effects similar to Fair Launch, serving as a springboard for crypto projects to directly capture consensus from the community.
In fact, some projects that prioritized community rounds in their early stages have typically performed well in the market because a large community and strong market consensus are the foundation for capturing value in crypto projects and are an important source for the long-term development of projects. Auction is providing a foundation for projects to establish community consensus first, empowering projects for long-term development through the community. From this perspective, Auction is also a very important springboard and value niche.
Therefore, no matter how you look at it, the launch of the Auction product is bringing a transparent wealth effect to users. Similarly, Pencils Protocol will establish a leading ecological position in the DeFi ecosystem and become an important engine for the development of the value system within the Scroll ecosystem.