> For the complete documentation index, see [llms.txt](https://faq.smart-places.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://faq.smart-places.io/token-launch/liquidity-bootstrapping-event-lbe/what-is-a-liquidity-bootstrapping-event-lbe-and-how-does-it-work.md).

# What is a Liquidity Bootstrapping Event (LBE) and how does it work?

There are various types of crypto launchpads that promote and sell new tokens. SmartPlaces chose the Liquidity Bootstrapping Event (LBE), a relatively new but well accepted format for launching cryptocurrencies.

The LBE allows for a fair token launch process for everyone, regardless of the size of their portfolio. This standard facilitates fair price definition, safeguards the reputation of new projects, prevents bot manipulation, deters price manipulation by whales, and offers a wide distribution of tokens.

A participating project will set aside a percentage of its total token supply (in SmartPlaces’ case, 15% of the total 30 bn $SPXT). LBE participants then have a set period (in this case, 4 days) during which they may deposit $ADA. After this period, the $ADA supplied by participants and the tokens from the project are combined to form the initial Liquidity Pool (LP).

LBE participants receive 50% of the resulting Liquidity Pool, in the form of Liquidity Provider Tokens (LP tokens), plus an NFT as a participation bonus. Effectively, participants exchange half of their $ADA for the project’s token, at the fair price determined at the end of the event.

Participants benefit by having the opportunity to obtain the project’s token in bulk for the first time, as well as potentially receive a farming boost from the NFT. This process is congestion-friendly and not subject to front-running.

The project retains the other 50% of the resulting Liquidity Pool, which de facto becomes Protocol Owned Liquidity (POL).

This method allows the market to set the price; in other words, the delivered ADA within the pool sets the price for the project’s token.


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