🧽Introduction

Motivation Behind Squeeze

Squeeze was born from a deep understanding of liquidity provider (LP) incentives. We realized that most LPs aren't supplied because the trading fees outweigh impermanent loss (IL) or loss-versus-rebalancing (LVR), but because of external incentives.

Liquidity providers generally fall into two categories: Farmers and Devs, both of whom tolerate IL, but for very different reasons:

• Farmers: These LPs are primarily drawn by decentralized exchange (DEX) incentives like tokens or points. They provide liquidity not because the returns from trading fees are attractive, but because they’re seeking alignment with DEX incentives.

• Developers: These LPs are supplied with liquidity from their own token making. For them, impermanent loss is irrelevant—what matters is the token price and market activity.

LPDfi (Liquidity Providing Derivatives) had difficulty finding product-market fit because it focused primarily on Farmers. Farmers had to be compensated for the trading fees lost when lending out their LP. As a result, traders bore the cost and got liquidated based on trading volume rather than price action, causing confusion. Additionally, when traders borrowed liquidity, they effectively removed it from the DEX, reducing overall liquidity. This misalignment with DEX incentives led Farmers to opt out of using LPDfi protocols.

Squeeze is also an LPDfi protocol, but one that caters specifically to developers, a relatively unexplored space. Developers provide liquidity as a public good and typically burn their LPs after a token launch. For them, impermanent loss is seen as an indicator of success, meaning more people have bought the token. Since the LP will be burned anyway, Squeeze uses it to offer traders better terms without the need to compensate the lender for lost trading fees—making it highly attractive for traders.

Squeezable Token Launchpads: Empowering Fairer Token Markets

Much of consumer crypto has focused on finding new reasons to create and trade tokens. Protocols like FriendTech and PumpFun have popularized token launchpads where anyone can create and trade tokens. Squeeze integrates seamlessly with these platforms by providing leverage from day zero, allowing traders to short or long tokens with reduced risks, such as unfair liquidations. This creates a more dynamic and balanced market, benefiting both the launchpads and their users.

Squeeze is especially critical in combating token traps, a common issue with new token launches. In these cases, insiders buy tokens at the lowest price mathematically possible, dump them after outsider participation, and walk away with profits, leaving newcomers at a loss. By introducing leverage and shorting capabilities at launch, Squeeze forces capital risk on these traps, making it harder for insiders to snipe the initial supply without consequence. This encourages healthier token ecosystems and more responsible token launches.

Squeeze Beyond Memes: Usage for Protocol Tokens

As more projects align with the decentralized and trustless ethos of crypto, they are committing larger portions of their token supply to onchain liquidity pools. By locking or burning these liquidity pools, they enhance transparency and signal trust to the community, ensuring that they are dedicated to long-term growth and stability. These locked pools work perfectly with Squeeze providing benefits for both traders and the protocol devs.

• Fee Capture: By using protocol-owned positions, projects can capture trading fees that would otherwise be burned, offering opportunities for token supply reduction or other strategic uses.

• CEX Listing and Off-Chain Liquidity: Enabling shorts makes it easier for market makers on centralized exchanges to hedge, facilitating deeper liquidity and easier token listings on CEXs. Onchain liquidity is complementary to offchain liquidity.

• Strategic Shorting: Teams can short their own token through untracked wallets, allowing them to lock-in profits while their positions vest without directly selling tokens in the open market. This is a better alternative for token holders to OTC as buybacks are programmed.

In the future, all tokens will launch using Squeeze. We have programmable money for Pete's sake. There’s no reason to rely on CEX perpetuals for leverage forever.