# What is a Liquidity Bootstrapping Event

## What is a Liquidity Bootstrapping Event?

A Liquidity Bootstrapping Event (LBE) is a fair launch mechanism used on Minswap to:

* Distribute a new token to the public
* Bootstrap liquidity for a trading pair
* Set an initial market-driven price
* Prevent front-running and whale dominance

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### How It Works

#### No Starting Price

Unlike fixed-price launches, the token starts with zero liquidity and no set price.

#### Dual Token Pool

* The team or project provides the new token (e.g., $XYZ).
* Participants contribute ADA during the LBE window.

#### Price Discovery Phase

* As more ADA is added, the price of the new token dynamically increases.
* Larger contributors must pay more per token, incentivising early participation and wider distribution.

#### Token Allocation

* At the end of the event, ADA and the new token form a trading pair pool on Minswap.
* Participants get LP tokens representing their share.

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### Benefits of Minswap’s LBE Model

#### Fair and Transparent Distribution

* Prevents sniping and early insider access

#### Community-Led Price Discovery

* Token price is based on supply/demand during the event

#### Instant Liquidity Post-LBE

* Tokens are tradable immediately with deep initial liquidity

#### Decentralised and Permissionless

* Anyone can participate using a Cardano wallet

#### Integration with Yield Farming

After an LBE, the LP tokens can often be:

* Staked in farms to earn MIN rewards
* Used in other DeFi strategies within the Cardano ecosystem